Delta (2308) announced its Q1 revenue and operations on April 28, 2023 in a press conference. Q1 revenue of 92.9 billion increased by 13% year-on-year, 12% less than last quarter; gross profit of 25.6 billion increased by 14% year-on-year, 14% less than 2022 Q4, of which the electric vehicle business turned from loss to profit for the first time, with a growth rate of up to 100%, and is expected to grow in the second quarter; the overall market in the second quarter is currently expected to be better than Q1, but the overall market has not seen signs of a strong recovery. On the whole, the market in Q2 is expected to be better than Q1, but there is no sign of a strong recovery in the overall economy.

First-quarter revenue growth was mainly driven by electric vehicles.

Delta said the company's first-quarter revenue growth was driven by electric vehicles, charging piles, gaming and data centers, while demand for power components and mobile phone/PC/NB components declined.

When asked about the impact of Tesla's current price-cutting strategy on the company, the Chairman replied that besides Tesla, Chinese car makers have also been slashing prices recently. Tesla's Elon Musk has directly announced that the purpose of the price cuts is to seize the market share of electric vehicles, and this strategy will continue in the future. From Delta's point of view, the prices of the orders that have already been secured will not change, and the profits of the future orders will depend on the competitiveness of the manufacturers. However, the CEO added in a later question that the EV industry is an area that requires early investment and has a technological threshold, and that under the implementation of the strategy of price cuts by various automobile manufacturers in order to compete in the market, this will not be a high-margin industry, but the amount of money in the EV market is very large and the growth rate each year is astonishing. Delta emphasizes that they have an excellent track record in this area, and 70% of the world's top 20 automakers are their customers.

There are two main reasons for Delta's investment in EVs: 1) The larger size of the finished product after the modularization of the motor system into a 3- or 4-unit system will result in higher transportation costs and increased demand for local assembly. 2) The U.S. IRA Act requires subsidies for the local assembly of EVs, and the amount of the subsidies is large, which will have a direct impact on the willingness to purchase the vehicle. For these two reasons, Delta will invest in factories in Dallas and Detroit for finished product assembly.

The charging pile market is not just about the piles themselves, the system is more important

When talking about the charging pile market, Delta said that they are more optimistic about the development of the entire charging pile system, including the overall ecosystem behind it, grid adaptation, energy storage and operation opportunities. Regarding the U.S. charging piles, Delta mentioned that Delta has a plant in Dallas that is already in production due to the U.S. IRA law that requires infrastructure equipment to be manufactured in the U.S. However, due to the price of the U.S. supply chain, the U.S. charging piles are not as expensive as the U.S. charging system. However, due to higher supply chain prices and labor costs in the U.S., this will be reflected in product prices.

Ji-Pu Viewpoint

Delta has solid performance in many of its business areas and has a clear vision of future market trends. Although facing cost pressures from customers' price cuts in the electric vehicle field and the current slow recovery in industrial automation, Delta remains firm in its strategy and is actively adjusting and responding to them. From electric vehicles to automation, from microgrids to energy storage, from data centers to charging piles, Delta is actively seeking and developing new business opportunities to cope with the rapidly changing market environment.