Investors are keenly watching: Has Elon Musk achieved this year's performance KPIs amidst his stellar reputation?
Elon Musk, often dubbed the "Iron Man" of our time, has been under the spotlight latelyWhile he may be the talk of the town in American politics or considered one of the highest-paid billionaires globally, at his core, Musk is a businessman managing multiple high-profile ventures like Tesla and SpaceXUltimately, he holds accountable for the operational success of these enterprises.
For publicly traded companies like Tesla (NASDAQ: TSLA), the operational realities weigh heavily, particularly with countless investors lurking in the backgroundRegardless of how much acclaim Musk receives, the pivotal question always remains: Did he meet this year's performance expectations?
Envisaging a successful year for Tesla in terms of meeting performance KPIs, it is important to note that the task is no small feat.
While he has not provided clear performance guidance, Musk made an audacious statement during the third quarter earnings call on October 24, 2024. He expressed aspirations for a slight increase in delivery volume for 2024. This assertion energized Tesla's stock, initiating a ripple of optimism and a momentary surge.
Will this optimism hold? In 2023, Tesla delivered 1.81 million vehicles globally, with nearly 1.3 million units accounted for in the first three quarters of 2024. A critical calculation reveals that to barely meet Musk’s ambitious KPI, Tesla must bolster its fourth-quarter deliveries to 510,000 units, a significant increase from last year's 480,000.
Challenges arise predominantly in the crucial Chinese market where, according to statistics from the Passenger Car Association, Tesla experienced a 5% drop in wholesale sales in October, followed by a 4% dip in November.
In a bid to ignite new growth engines, Tesla might consider embracing partnerships; one significant ally could be China Unicom (600050.SH).
Astute observers have already noted how, even while many new energy vehicle manufacturers struggle with profitability, China Unicom has emerged as an immense powerhouse behind automobile brands, effectively capitalizing on the benefits of vehicle networking and interconnected technology.
One vertical media outlet mused, "China Unicom, you are too low-key, yet you have become the exclusive choice for Tesla's communication system."
This praise stems from the fact that all Tesla vehicles sold in China incorporate China Unicom's IoT SIM cards to facilitate internet access
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Tesla’s operating instructions even stipulate that vehicle owners must authenticate their China Unicom SIM card users.
Upon visiting the authentication page for China Unicom, one can see it has emerged as the internet connectivity provider for notable manufacturers like Mercedes-Benz, Ford, Geely, and Li Auto, establishing itself as the invisible giant in the back-end of automotive enterprises.
The rationale behind Tesla's choice of China Unicom as their network operator can be traced through a shared technical evolutionUnicom's communication technologies from the 3G WCDMA to 4G FDD LTE have created a synergy ideal for lasting collaboration.
Moreover, China Unicom's expansive retail network has been instrumental in Tesla's prior endeavors to expand their charging infrastructureBack in 2018, Tesla announced a strategic partnership with China Unicom to build 400 destination charging stations across 120 citiesDuring the signing ceremony, the inauguration of the Tesla Supercharger station at the Chengdu Unicom Tianfu outlet was lauded by then Tesla Global Vice President Wu Bixuan, noting that this partnership facilitated rapid progress in constructing a national charging network.
Besides China Unicom, there is a considerable list of Chinese suppliers on Tesla's core vendor roster.
For instance, CATL supplies the battery systems, Dongshan Precision provides vehicle body molds, and Hengdian East Magnetic and Kaizhong Precision contribute to the electric drive and control systemsIn light of future developments, Tesla’s collaboration with the Chinese supply chain is poised to deepen further.
This perspective is further bolstered by examining two distinct technical paths in autonomous driving: "Vehicle Intelligence" and "Integrated Road-Cloud Coordination."
“Vehicle Intelligence” can be simplistically defined as creating “smart cars,” a route eagerly pursued by mainstream automobile manufacturers and autonomous driving technology service providers in Europe and America; conversely, the “Integrated Road-Cloud Coordination” route represents the mainstream domestic approach orchestrated by governmental policies to achieve autonomous driving
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This path encompasses organic cooperation between “smart cars” and roads, pedestrians, and environmental factors in real-timeAlthough both strategies aim to achieve high-level autonomous driving, the means and practical applications display significant disparities.
For any global automotive enterprise wishing to continue commercializing in China, reconciling the differences between the Chinese "Road-Cloud Coordination" paradigm and the global "Vehicle Intelligence" model is imperative.
This step in the autonomous driving chess game holds particularly high stakes for Tesla.
Amidst intensifying competition in the global new energy vehicle sector, Tesla’s hopes of retaining its leading position hinge largely on its commitment to Full-Self Driving (FSD) technologySince 2022, Musk has repeatedly underscored the significance and potential of FSD at Tesla’s earnings calls, framing it as an essential prerequisite for the company's proposed Robotaxi—an essential venture into the ride-hailing market and a broader approach to capitalizing on the mobility industry.
As Tesla escalates its FSD deployments overseas, it also intensifies efforts to introduce these technologies to ChinaRecent reports from October 18 indicate that FSD could soon enter the Chinese market; several insiders have disclosed that the Chinese government supports the trial run of specific functionalities, provided that existing laws and regulations are followed, but regulatory approval for entry remains pending.
Looking ahead, to effectively integrate into the “Road-Cloud Coordination” network in China, Tesla will undeniably require an array of adaptive sensor systems aimed to facilitate collaboration with local roads, pedestrians, and environmental conditions
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This will involve additional partnerships with Chinese industry chains and suppliers.
Data security and regulatory compliance also pose pressing challenges that necessitate collaborative approaches with Chinese enterprisesReports have noted that the swift deployment of Tesla’s FSD in China hinges on how geo-spatial data and other fundamental data can be accurately and safely collected and utilized, highlighting the necessity for qualified firms to carry out related surveying activitiesTesla currently lacks such qualifications.
As such, Tesla collaborates with qualified Chinese firms, delegating them to conduct the required mapping activitiesMusk has hinted at the desire to directly access a portion of non-sensitive video data for FSD system training and has suggested that specialized governmental teams evaluate the ensuing data security measures.
While additional implementation details and regulatory frameworks remain to be defined, the automotive industry's pursuit of "Vehicle Intelligence" alongside "Road-Cloud Coordination" signifies an inevitable trendTesla’s ambitious FSD objectives envision a robust partnership with the Chinese supply chain as an essential component of its roadmap.
In Musk's and Tesla's business landscape, another stellar project that has garnered increasing attention over recent years, equally as dazzling as electric vehicles, is their humanoid robot—Optimus.
On November 28, Tesla Robot shared a video update showcasing Optimus's agile hand iterations, allowing individuals to appreciate the accelerated pace towards commercializing humanoid robots, inching their way into everyday life.
The video demonstrated Optimus successfully catching a tennis ball while executing coordinated body and arm movements alongside a subtle nodding gesture
A report from Shanghai Securities on December 5 analyzed that the dexterity displayed by Optimus is nearing the level of human capability, although the right hand exhibited no motions during the video presentation.
Musk harbors high hopes for the commercialization prospects of humanoid robots, even fantasizing about the potential for Optimus to escalate Tesla’s valuation by a staggering 430,000 times—during a 2024 shareholders' meeting, he claimed that humanoid robots could elevate Tesla’s valuation to $25 trillion, especially when the company itself was valued around $580 billion at the time.
The expansive horizons of humanoid robot development have garnered acknowledgment, with Citigroup analysts, Rob Garlick and Wenyan Fei, noting a projected market potential of $7 trillion for humanoid robots in the coming 25 yearsHowever, for companies like Tesla to achieve the intended commercialization, securing partnerships within the Chinese supply chain stands as a fundamental prerequisite.
In an analysis relayed by Reuters in 2024, they emphasized that akin to the electric vehicle supply chain, China's impetus and advantage in the robotics sector derive from policy support, vigorous competition, and a robust supply chainHumanoid robots embody a culmination of various interdisciplinary technologies, necessitating manufacturing prowess across components such as assembly, sensors, gearboxes, motors, and machine tools, all of which are key fuel sources for elevating Tesla’s robotic aspirations.
Reportedly, approximately 38% of the global humanoid robot supply chain companies are based in China, with around 57% located in the Greater Bay Area
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