This article is from the public number:Guotai Junan Securities Research (ID: gtjaresearch), title map from: Visual China

Tesla’s three quarterly report is indeed “happy”.

Among the many highlights, 1.43 was achieved.The profit of 100 million US dollars is a surprise, but what is even more amazing is that Tesla’s super factory in Shanghai has started trial production.

Know that it’s only 168 days since Tesla announced that the factory was licensed.

In addition, Tesla is proud to announce the cost of producing a car at this super factory (capital expenditure per unit capacity), will be about 65% lower than in the United States.

There is no doubt that the high efficiency and low cost of the Chinese manufacturing industry chain is perfectly reflected in this factory.

If we dig deep into the industrial chain company behind the Tesla Super Factory, we will find that compared with the Apple industry chain and the Huawei industrial chain, the length and depth of the automobile chain far exceeds that of the smartphone. The list of suppliers that continue to benefit is also longer.

The new team of Guotai Junan Electric has commented on the Tesla profitable event for the first time. At the same time, the research team of Guotai Junan Nonferrous and High-end Equipment has released a number of companies on the Tesla supply chain in the past. Depth report.

As Apple and Huawei have driven the prosperity of the entire industry chain, we also have reason to expect that Tesla’s new car-building forces will boost the new industrial chain that is completely different from traditional car manufacturing.

01 Tesla’s fifth profit

From a historical perspective, Tesla’s earnings are often accompanied by high income growth.

For example, in the first quarter of 2013, the company’s revenue growth rate was as high as 90%, achieving the first profit;

In the third quarter of 2016, the company’s revenue growth rate was around 80%, achieving a second profit;

In the third quarter of 2018, the company’s revenue growth rate was around 70%, achieving a third profit;

In the fourth quarter of 2018, revenue growth slowed, but it also achieved profitability.

In the third quarter of 2019, despite a 3% decline in revenue growth, it achieved a profit of $143 million, which is expected by the market.

The reason why this profit in 2019 is the first time in history is because it is different from the past dependence on income regulations.The profit realized by the growth of the model, The main reason for this profit is that the company has experienced substantial improvement in controlling operating costs and reducing costs.

The first four earnings in history mainly depend on revenue growth. This profit mainly depends on cost control. Data source: company announcement, Guotai Junan Securities Research

Especially since this year, Tesla has made it harder to make a profit in the context of the price cuts of Tesla models, which indicates that the company’s operations have been substantially improved.

With the start of the Shanghai plant, which is just in production today, Tesla’s operating costs will continue to decrease.

According to the third quarter earnings report released by Tesla on October 24, the vehicle construction cost of the Shanghai Super Factory (capital expenditure per unit capacity) , which will be about 65% lower than the US production system, and only depreciation costs will save 2.9 million yuan per unit.

Before entering the Chinese market, Tesla CEO Musk expressed his hope to attract consumers with lower product prices in the Chinese market by reducing production costs, transportation costs, import tariffs and other overall vehicle costs.

Because the Model3 is more affordable, the main price/performance ratio is the explosive model that Tesla pushes. Therefore, at this point in time, whether this model can be mass-produced and delivered in the Shanghai factory, the cash flow is tight. Tesla is undoubtedly an important node about life and death.

Tesla angle delivery, Model 3 continues to increase (unit: vehicle), data source: company announcement, Guotai Junan Securities Research

02 What will the Chinese factory & China market bring to Tesla?

As early as 2015, the Chinese market has surpassed the United States to become the world’s largest auto consumer. The Chinese consumer market is undoubtedly attractive to Musk, but the most important of the chain is the restructuring of the supply chain.

As the world’s leading electric car company, Tesla’s supply chain is very luxurious.

Specifically, its supply chain involves ten parts including powertrain system, electric drive system, charging, chassis, body, other components, central control system, interior and exterior, involving direct and indirect suppliers. More than one hundred.

Tesla Supply Chain, Image Source: Intuitive Learning Machinery, Guotai Junan Securities Research

Among them, Tesla’s core technology suppliers are mostly from Japan, the United States and Europe, and domestic companies mostly enter the supply chain system as secondary raw material suppliers.

Example: Tesla lithium battery pack supplier list, picture source: Intuitive learning machinery, Guotai Junan Securities Research

For example, in the current core lithium battery pack of Tesla, the manufacturer of lithium battery PACK is Japan Matsushita, the supplier of cathode material and separator is Sumitomo Chemical of Japan, and the supplier of anode material is Hitachi Chemical of Japan. Japan’s Mitsubishi Chemical production.

In the battery pack, only the battery connector is supplied by China Changying Precision, and the cover and protective case are provided by Xusheng.

Tesla CEO Musk has promised to reduce the price of Model 3 to $35,000 and enter the Chinese market. For now, the only possibility for Model 3 to achieve this goal and still be profitable is to use Chinese factories and Chinese suppliers.

With the support of the Chinese government and banks for Tesla, Tesla may consider more localized procurement after the start of construction in China.

This is undoubtedly a major benefit for many Chinese companies that have not yet entered the Tesla supply chain.

03 How big is Tesla’s “localization” space?

With the gradual rollout of Tesla electric vehicles in China, the battery, motor and parts housing of Tesla Model 3 will have strong demand for raw materials in the industry chain-

Cobalt, manganese, nickel, lithium, and graphite in the upstream raw materials, and the connectors in the middle and lower reaches will generate large demand kinetic energy, which will greatly benefit the entire power vehicle industry chain.

We believe that the focus should be on several links:

1, battery and battery raw materials

Upstream raw materials are the most deterministic beneficiaries.

For example, Tesla is considering switching the battery from Panasonic to the LG Nanjing plant. The upstream materials of the LG battery are basically made in China, and the cost will be more.

Colored plates such as cobalt, lithium, magnetic materials and copper foil will become potential suppliers of Tesla.

The list of upstream raw materials for Tesla bicycles, source: Guotai Junan Securities Research

A share of non-ferrous listed companies, Huayou Cobalt/Luoyang Molybdenum (Cobalt), Qifeng Lithium Industry/Tianqi Lithium Industry (Lithium Hydroxide), Tongling Nonferrous/Norde Shares(Lithium Copper Foil ), Zhongke Sanhuan (motor magnet), Nanshan Aluminum (four doors and two covers) and the title of (power device housing) are worthy of attention.

2, charging pile

At present, 11 of Tesla’s 21 direct suppliers are charging pile equipment and operating companies, accounting for 50%.

List of Tesla charging equipment suppliers, picture source: Intuitive learning machinery, Guotai Junan Securities Research

As the focus of Tesla’s industrial chain shifts to China, and under the new national standard for charging facilities, manufacturers, operators and integrators of China’s charging equipment are expected to further increase their participation in Tesla’s Chinaization.

We have selected A-share charging pile related companies that have formed cooperation with Tesla charging stations, and it is expected to further deepen cooperation with Tesla in the future market development.

Recommended target: Zhongyeda(002441), Wanma shares (002276), Smart Energy (600869).

China has some manufacturers to enter, Tesla charging equipment supplier directory, data source: Tesla, Inside Evs, HMPOWER, “fast technology”, Guotai Junan Securities Research

3, other beneficiary targets:

Pilot Intelligence(300450) was announced at the end of 2018, and signed a winder and cylindrical battery assembly line with Tesla.