When Tesla is in "dire straits" again, Musk comes up with a "Chinese solution"!

On January 7, 2020, Tesla delivered domestically produced Model 3 at the Shanghai Gigafactory for the first time, with Elon Musk personally present and excitedly performing an impromptu dance.

He first paced back and forth on stage, swaying his massive body to the rhythm of the music, and finally took off his jacket and started a "striptease".

Elon Musk's excitement is easy to understand.

For Tesla, this day was of great significance.

A few years ago, Tesla was in a serious crisis of production capacity and cash flow. On one hand, the production volume of Model 3 was insufficient to meet delivery demands, and on the other hand, huge R&D investment led to the company's financial situation nearing collapse.

Coupled with the siege from Wall Street short sellers, Tesla was once on the brink of bankruptcy.

However, with the start of deliveries at the Shanghai Gigafactory, all production capacity issues were resolved.

Tesla's production volume soared from 365,000 in 2019 to 509,000 in 2020, and continued to rise to 930,000 and 1.37 million vehicles in 2021 and 2022, respectively. The proportion of production volume from the Shanghai Gigafactory increased from 30% to 53%.

At the same time, Tesla's market value skyrocketed, from $57.4 billion at the end of 2018 to $1.06 trillion at the end of 2021, with a growth of over 1600% in three years.

It can be said that the Shanghai factory saved Tesla.

Looking at the present, Tesla is once again facing a life-or-death moment—despite several rounds of price cuts, sales have not improved, forcing Musk to seek survival by cutting global workforce by 10%, resulting in 14,000 employees being "graduated".

The financial report released last week showed that Tesla's first-quarter revenue fell by 9% year-on-year, below market expectations. This was not only the first year-on-year decline since the second quarter of 2020, but also the largest drop since 2012. Affected by price cuts and AI development expenses, net profit fell by 55% year-on-year.

At this critical moment, Elon Musk unexpectedly visited China, reportedly to promote the landing of FSD in China and make new progress for Tesla and other intelligent connected vehicles in China. Will Tesla's "blessed land" once again demonstrate its power?

Elon Musk's Robotaxi, which he strongly promotes, is not favored by Wall Street. Can Tesla deliver the Model 2 that Wall Street is anticipating on time?

Against the backdrop of sluggish global car demand and declining attractiveness of existing models, Tesla needs new products to regain its dominant position.

On this issue, Elon Musk has painted two big pictures for Wall Street: the Robotaxi for autonomous driving rentals and the next generation vehicle (possibly the rumored affordable Model 2). Elon Musk stated that Tesla plans to launch Robotaxi in August this year and will start production of a more cost-effective next-generation model in the second half of next year. The new model could be introduced as early as later this year or possibly in early next year.

During the first quarter earnings call, Musk emphasized that "autonomous driving" is now Tesla's top priority. He also educated investors that if they do not see Tesla as an autonomous driving company, they should not buy Tesla stock.

From Musk's remarks, it can be seen that in the future, he will focus more on Robotaxi. The significant progress in Tesla's Full Self-Driving (FSD) technology has greatly boosted his confidence in robot taxis.

However, the issue lies in the fact that, compared to the distant autonomous driving, Wall Street and the market are more eager for the Model 2 in the short term.

Tu Le, founder of electric vehicle consultancy Sino Auto Insights, said in a recent media interview, "I think Robotaxi will take at least eight to nine years to be put into use." This is the most optimistic scenario.

When Tesla was the only star electric vehicle company, time was not an issue, but the situation is no longer the same now. Considering the fierce competition, Musk does not have eight to nine years to save Tesla.

Furthermore, there are concerns that using a low-cost model to attract consumers and Wall Street may not effectively alleviate the pressure Tesla is currently facing.

On one hand, Chinese domestic electric vehicle companies can produce at much lower costs, and on the other hand, traditional car manufacturers are increasing promotions for gasoline and hybrid cars, further eroding Tesla's market share.

Tesla's stock price surged after Musk reaffirmed the new model plan, but if Model 2 does not launch as scheduled, it would be like Tesla waving the white flag in the global electric vehicle battle, putting Tesla's stock price under pressure once again.

Will FSD Land in China? Tesla's "Blessed Land" Shows Power Again?

As Tesla finds itself in a "predicament" once again, Musk has turned his attention to Tesla's "blessed land" - China.

According to Xinhua News Agency, on the afternoon of April 28, Musk arrived at the Diaoyutai State Guesthouse in Beijing and had an in-depth exchange with Premier Li Keqiang.

Li Keqiang stated that the economies of China and the United States are deeply integrated, with mutual benefits from each other's development. Tesla's development in China is a successful example of Sino-US economic and trade cooperation.

Musk mentioned that the Tesla Shanghai Gigafactory is Tesla's best-performing factory, thanks to the hard work and wisdom of the Chinese team. Tesla is willing to further deepen cooperation with China to achieve more win-win results.

According to a recent article in the Global Times, some speculate that Musk's visit to China this time is aimed at promoting the landing of FSD in China. Earlier this month, Musk announced on the social platform X that FSD technology will be "soon" introduced to Chinese users.

It is worth noting that on Musk's first day in China, Tesla passed China's automotive data security compliance requirements On April 28, the China Association of Automobile Manufacturers and the National Computer Network Emergency Response Technical Team/Coordination Center issued a report on the inspection of 4 security requirements for car data processing, stating that all models produced at Tesla's Shanghai Gigafactory comply with regulatory requirements.

According to Yicai, Tesla stated that restrictions on the travel and parking of smart connected vehicles like Tesla have been gradually lifted nationwide.

On the same day, Musk stated on Twitter that Tesla will invest around $10 billion this year in AI training and inference, with the inference mainly used for vehicles.

Furthermore, media reports indicate that Tesla is set to collaborate with Baidu in China on mapping and navigation functions.

With all these reports, does it imply that FSD is about to be implemented in China?

A research report from CICC pointed out that if FSD is to be promoted in China, the entire data loop needs to be within the country, preparations need to be made in terms of data collection and model training, and consideration should be given to whether the BEV perception solution can be well localized. In China, mapping for FSD may require collaboration with Chinese manufacturers, and Tesla needs to establish a local computing center and form a team for local algorithm adaptation.

The last time Tesla was on the brink of bankruptcy, China saved Musk. Will this miracle happen again this time?