Author | HanLearn more about financial information | BT Financial Data HubTotal text length: 3,358 words, estimated reading time: 9 minutes

"What investors want to know most is: Has the ever-popular Elon Musk met this year's performance KPI?"

Elon Musk, the 'Iron Man', has been in the spotlight recently. However, whether he is the 'hottest topic in American politics' or a 'billionaire tycoon,' his essential role remains as the operator and manager of companies like Tesla and SpaceX – Musk is ultimately responsible for the operations of these enterprises.

Especially for a listed company like Tesla (NASDAQ: TSLA), there are millions of investors behind it. Even if Musk is extremely popular, he still faces the ultimate test of 'has this year's performance been achieved?'

Tesla faces considerable challenges in achieving its performance KPIs this year.

Although there are no clear performance guidelines, during the third-quarter earnings call on October 24, 2024, Musk set a goal, stating that he aimed for a slight increase in deliveries in 2024. At that time, Tesla's share price rebounded significantly.

Will this goal be achieved? In 2023, Tesla delivered 1.81 million vehicles globally, with approximately 1.3 million delivered in the first three quarters of 2024. A simple calculation reveals that in the fourth quarter, Tesla must increase deliveries from 480,000 units in the same period last year to 510,000 units to barely meet the performance KPI mentioned by Musk to investors.

The challenge is that according to the Passenger Car Association's statistics, in the crucial Chinese market, Tesla's wholesale sales in October and November declined by 5% and 4%, respectively.

To stimulate new growth momentum, Tesla can seek additional partnerships. China Unicom (600050.SH) is one of the partners Tesla needs to embrace closely.

1

China Unicom is the hidden giant behind automakers

Some keen observers have noticed that while new energy automakers are still struggling to turn a profit, China Unicom has become a giant behind automotive brands, benefiting fully from the dividends of the Internet of Vehicles and the Internet of Everything era.

'China Unicom, you're too low-key! You've become the only choice for Tesla's in-car communication' – a communication vertical media outlet exclaimed online.

This is because all Tesla vehicles sold domestically are equipped with China Unicom's IoT SIM cards to provide internet access services. Tesla's startup instructions also clearly state that owners must complete real-name authentication for the China Unicom SIM card.

On China Unicom's real-name authentication page, it can be seen that the company is also an internet access provider for many automakers such as Mercedes-Benz, Ford, Geely, and Li Auto, truly a hidden giant behind automakers.

Why did Tesla choose China Unicom as its network access partner? Some people have reviewed the development history of the two companies from a technical perspective. China Unicom's WCDMA communication technology in the 3G era and FDD LTE communication technology in the 4G era are more compatible with Tesla, making it a long-term partner.

Additionally, China Unicom's dense network of business halls was a crucial factor in Tesla's significant expansion of charging station infrastructure in previous years. In 2018, Tesla announced a strategic partnership with China Unicom to jointly build 400 destination charging stations in 120 cities nationwide. At the signing ceremony, the unveiling of the Tesla Supercharger Station at the Chengdu Unicom Tianfu Business Hall took place. Wu Bixuan, then Tesla's global vice president, stated that through in-depth cooperation with China Unicom, Tesla was able to rapidly improve its nationwide charging network construction.

2

Realizing the Internet of Vehicles Requires China Unicom

In addition to China Unicom, Tesla's list of core suppliers includes a long list of Chinese companies.

For example, CATL and DBS Precision supply battery systems, Tianqi Mould supplies body molds, Hengdian East Magnet and KaiZhong Precision supply electric drive and control systems... Looking ahead, Tesla's cooperation with China's supply chain is bound to deepen further.

This viewpoint is supported by the two main technical paths of autonomous driving: 'single-vehicle intelligence' and 'vehicle-road-cloud integration.'

'Single-vehicle intelligence' can be simply understood as 'smart cars,' which is the route bet on by mainstream European and American automakers and autonomous driving technology service providers. In contrast, 'vehicle-road-cloud integration' is the mainstream technical route for realizing autonomous driving guided by domestic policies, which can be summarized as enabling organic coordination and real-time linkage between 'smart cars' and roads, pedestrians, and the environment. Although both routes aim to achieve high-level autonomous driving, their implementation methods differ significantly.

As a global multinational automaker, any company that wishes to continue commercializing in China must overcome the differences between China's 'vehicle-road-cloud' and the global market's 'single-vehicle intelligence.'

Especially for Tesla, this step in autonomous driving is crucial.

With global competition in the new energy vehicle market intensifying, Tesla aims to maintain its advantage by heavily betting on FSD (Full Self-Driving) technology. Since 2022, Musk has repeatedly emphasized the importance and value potential of FSD during Tesla's earnings calls, highlighting it as a necessary prerequisite for the company's push into Robotaxi services. The latter is crucial for Tesla to enter the taxi market and tap into the broader transportation industry.

While Tesla continuously promotes FSD applications overseas, it is also actively seeking to introduce FSD to China. According to a report by China Daily on October 18, news about the imminent launch of FSD in the Chinese market has been circulating, with multiple insiders revealing that the Chinese government supports testing some functions on a trial basis "while adhering to existing laws and regulations," but regulatory approval for entry into China has not yet been obtained.

It is foreseeable that to integrate into China's 'vehicle-road-cloud integrated' autonomous driving network in the future, Tesla will inevitably need to use more sensor systems compatible with the 'vehicle-road-cloud' to achieve coordination with China's roads, pedestrians, and the environment. This will require further cooperation with China's industrial chain and suppliers.

Data security and regulation are also issues that must be addressed, and cooperation with Chinese enterprises is the solution. The aforementioned China Daily report mentioned details, stating that a core issue in the rapid deployment of Tesla's FSD in China lies in how to collect basic geographic information and other data, as well as how to ensure data security and compliance. It is important to note that information such as the coordinates and images of intelligent connected vehicles are clearly defined as surveying and mapping activities under the Surveying and Mapping Law of the People's Republic of China, which must be conducted by qualified enterprises. However, Tesla does not possess these qualifications.

Currently, Tesla cooperates with qualified Chinese enterprises and entrusts them with relevant surveying and mapping activities. Musk has also expressed the hope of directly obtaining some non-sensitive video data to train the FSD system, suggesting that a dedicated government team assess and ensure data security.

More implementation details and regulatory requirements need to be clarified, but it is a general trend for the automotive industry to pursue bidirectional adaptability from 'single-vehicle intelligence' to 'vehicle-road-cloud.' Tesla's FSD has ambitious goals, and China's supply chain is an indispensable key piece of the puzzle in its vision.

3

A $25 Trillion Market Value Relies on China's Supply Chain

In Musk and Tesla's business empire, another star that has gained significant attention in recent years, alongside electric vehicles, is its humanoid robot – Optimus.

On November 28, Tesla Robots released a new video update on its official account, showcasing iterations and optimizations in Optimus' dexterous hands, giving many people a visual feeling that the commercialization of humanoid robots is accelerating and gradually entering people's daily lives.

The video shows that Optimus can stably catch a tennis ball thrown at it, with its fingers flexing smoothly. During movement, its body and arms coordinate well, and it completes a nodding gesture. A research report published by Shanghai Securities on December 5 pointed out that the humanoid robot demonstrated in this showcase exhibits a high level of fluidity, with the coordination of the left hand being almost indistinguishable from that of a human, but the right hand lacks movement in the video.

Musk has high hopes for the commercialization prospects of humanoid robots, even envisioning that they could increase Tesla's valuation by 430,000 times. During Tesla's 2024 Annual Shareholder Meeting, he claimed that humanoid robots could potentially increase Tesla's market value to $25 trillion in the future, whereas Tesla's market value at that time was only $580 billion.

The vast development potential of humanoid robots has been recognized. For example, Citigroup analysts Rob Garlick and Wenyan Fei pointed out that the market potential for humanoid robots could reach $7 trillion over the next 25 years. However, for companies like Tesla to realize the commercialization of humanoid robots, securing China's supply chain is a necessary prerequisite.

An analysis by Reuters in 2024 pointed out that, similar to the electric vehicle industry chain, China's drive and advantage in entering the robotics industry stem from policy support, widespread competition, and a deep supply chain. Humanoid robots are the culmination of multiple interdisciplinary technologies such as manufacturing, materials, energy, and bionics. The manufacturing advantages of Chinese manufacturing enterprises in assembly, sensors, reducers, transmission components, screws, motors, machine tools, and equipment are the forces supporting Tesla's dream of realizing robots.

According to statistics from the China Strategic Emerging Industries website of the China Reform and Development Newspaper, approximately 38% of the global humanoid robot industry's supply chain enterprises are located in China in 2024, with about 57% of these supply chain enterprises in the Guangdong-Hong Kong-Macao Greater Bay Area. The dream of humanoid robots bringing about productivity changes and entering every household awaits the formation of an industrial chain, with deep integration and innovation among multinational companies like Tesla, local Chinese startups, and millions of supply chain enterprises.

Tesla's recent statements also express its determination to embrace Chinese suppliers more closely. On November 28, Tao Lin, Vice President of Tesla's External Affairs, posted on Weibo that over 95% of the components for Tesla's Shanghai Gigafactory come from local suppliers, and Tesla's achievements in China and globally are inseparable from these supply chain partners.

Elon Musk, the 'Iron Man,' always weaves fantasies and depicts visions that disrupt industries and even the world. Returning to the question most concerned by investors, can Musk and Tesla realize these visions without relying on Chinese supply chain enterprises?