Talking Cars Tuesday: TESLA
July sales figures out of Germany show Tesla's market share of EV vehicles declining from 18.4% in 2019 to 8.7% last month. It's sales declined not only in market share but in total vehicles sold (about 1,400 units YoY).
VW, Renault and Hyundai all blew past Tesla in a growing market. Daimler and BMW are even, or very close, to Tesla market share.
The Tesla assembly plant scheduled to begin production in 2021 will not be in time to offset a surge of local offerings by competitors.
Tesla is facing this similar vigorous competition in Asia where competitors are ramping up quickly to offer alternatives to the market Tesla has proven exists.
In the US, there is a concerted effort by nearly all major players to offer a plethora of new EV choices in the next few model years.
It should also be noted that Tesla uses "interesting" accounting methods to post accounts receivables of energy credits it sells to other automakers. This accounting tool is viewed by some to have an Enron flavor. It also should be noted that a LARGE and MAJOR portion of Tesla's profit is sales of these credits. Once other automakers have their own fleets of EVs would they need to purchase these credits from Tesla anymore?
Finally, Tesla is experiencing significant quality issues and is at the bottom, or near the bottom, of the latest JD Power quality surveys. Based on their last launch it's not clear when they will be moving up that list. Their global competitors have deep supply chains and quality systems that, while not perfect, have decades of experience that Tesla is missing. If competitors EV vehicles that are perceived at a higher quality and are profitable (not requiring a government EV subsidy) where does that leave Tesla?
I'm very skeptical of Tesla long-term and their financials don't seem to merit the absurd P/E ratios the stock is demanding. I think they've had a great run proving there is a market for EVs at scale but I don't see how they can avoid an implosion in the near future.
Thoughts?
August 11th, 2020 at 3:23 PM ^
The range is more like 300 miles. That 170 is about what you get with a Nissan Leaf or Chevy Volt.
August 11th, 2020 at 4:49 PM ^
Not specific to you or anything, but the people with the biggest range anxiety are those who haven’t owned an EV and used it as a daily driver. Admittedly a 170 mile daily commute is extremely long but for the vast majority of use cases EVs will easily have enough range.
August 11th, 2020 at 6:32 PM ^
I know... My commute is longer than most, and stuck in traffic on Virginia summer days will suck that battery dry! But yeah, most EV owners are within walking distance from work (relatively speaking).
August 11th, 2020 at 3:10 PM ^
Nikola Garbage Truck.... its the new thing.
Tesla is the biggest bubble since the .com era. if not for gads of borrowed $$ and piles of government subsidy, they couldn't turn the lights on.
Musk is a brilliant dude and Space X is legit, but its a miracle Tesla is still around, let alone 'one of the largest automakers in the world' by market cap..... total paper tiger. Any significant liquidity event and they're done. You can only live on credit cards until you hit all the limits and no one will extend you more (ask my ex)
August 11th, 2020 at 3:11 PM ^
I purchased a Model 3 in April and absolutely love it. The simplicity, performance, software, are all great. Four of us did FL to MI road trip in July and was able to leverage the superchargers. My wife indicated to me that she didn't think the trip was any different than any very long road trip. She actually preferred knowing exactly where, and how long, the next stop was going to be. It's been great not having to pump gas weekly, I simply plug in at home and charge overnight. The software updates every couple weeks are also interesting. The car just keeps changing bit by bit over time. Happy owner so far! Also, no oil changes every 6-8 weeks(in my case) or scheduled maintenance. I think it's glorious. Also, not being an aggressive driver, I doubt I'll ever have brake maintenance to do, I never have to use them.
August 11th, 2020 at 3:16 PM ^
I totally agree. I just made a road trip from MA to MI and it was super enjoyable. You have to charge about every 2 hours or so but knowing where and when you need to stop helps make the road trip fun and engaging since you can look up things to do or places to go in each destination area. On top of that, the autosteer made everything a breeze.
August 11th, 2020 at 3:19 PM ^
Autopilot in slow traffic is priceless! I LOVED AP when we hit some traffic jams. Turned it on, sat back, and chilled while watching everyone jocky around lane to lane.
August 11th, 2020 at 5:27 PM ^
You had to stop every 2 hours? That’s sounds terrible. I thought they had way longer ranges than 2 hours worth. How long was each recharge?
August 11th, 2020 at 6:42 PM ^
I’m going to be making some cross country commutes to AZ & back. I was considering a Tesla, so I used their website to chart a course, & they had 20 stops scheduled for a 2K mile drive. These supercharger stops were listed as approx. 30 minutes each. So drive 100 miles & charge for 30 minutes 20 times. I will not be purchasing a Tesla.
August 11th, 2020 at 9:40 PM ^
This is a huge disadvantage that electrics will just always have against ICEs until they make an electric that can go about 800 miles without significant loss of range in weather. If you can charge overnight at the hotel, fine, that takes care of most road trips (except the people who like to go all night and swap drivers, they're out of luck.) My next car might be a plug-in hybrid - it's the best of both worlds.
August 12th, 2020 at 9:38 AM ^
Keep moving the goal posts. First it was 400 miles a charge and now it's 800! The current ICE car I have gets 330 miles tank if I run it bone bone dry to practically it gets 300 or maybe 260 if I'm cruising 80 on the freeway. There will always be edge use cases but the best electric cars now cover 95%+ of them and if you're on the free way traveling with people you're going to get out every 3 hours anyways.
August 12th, 2020 at 10:09 AM ^
" So drive 100 miles & charge for 30 minutes 20 times." This isn't accurate. We would drive 150-180 miles between stops and our charging times varied between 15-25 mins. You don't charge to 100%, you just charge to a range that gets you to your next stop. The batteries charge at a faster rate the more drained they are so on longer road trips, getting to your charger with 5-10% range is considered ideal.
August 12th, 2020 at 2:12 PM ^
Standard range for my model 3 is 225 miles. We got the car with no bells or whistles but there is an extended range that I think gives you another 100 miles for $10k. Trust me that I was skeptical about the road trip and the amount of stops. Turned out that, while it made the trip longer, it made the trip more enjoyable, especially given that we had our dog with us and it was nice to stretch our feet every 2 hours and switch driving.
August 11th, 2020 at 3:26 PM ^
Tesla did a bunch of great things, but idk how much more they offer moving forward. Seems like Elon has his sights set elsewhere, and if Tesla is a back burner project, it won't be a great one. Especially as the market heats up. Blows my mind that Ford, a company that produces a profit trades at $7 currently, while Tesla is around 200 times that without ever making a profit off of a vehicle. I guess people are buying hope of a bright future! But I've soured on Tesla as a company after how they treated suppliers with the launch of the Model 3.
August 11th, 2020 at 3:26 PM ^
I don't own Tesla stock (my mistake!), but it's not all doom & gloom as evidenced by Q2 Sales in the US:
- Tesla + 13.2%;
- Ford -23.4% (our boy Hackett was canned, I mean resigned);
- GM -21.4%;
- Toyota -22.4%
I'm not sure why you cherry picked Germany (is there a gov't EV incentive that topped out for Tesla, like in the US)?
Tesla has the supercharger infrastructure that other EV makers do not have, and it's improving and has a significant cost and experience advantage in producing batteries.
The main difference is this, Tesla doesn't have a bunch of 20 year auto veterans who hate EVs, like the traditional OEMs. That's their advantage. They don't want to shove a bunch of batteries in a Fusion or a Golf or a Corolla or a Versa and call it an EV.
Tesla doesn't care about an out of date dealer network that customers hate. When Tesla's pickup is out and they start popping out $25K EVs with a 250 mile range, the traditional autos will go bankrupt.
States, like NJ are requiring all new construction be fitted with 240V plugs in the garage.
This is Blockbuster v. Netflix from 2006.
August 11th, 2020 at 5:36 PM ^
Germany is the largest EV market in Europe...and it's growing. Tesla went from market leader to middle of the pack in 12 months once it faced serious competition (one of which was an Asian company). I believed the German market may be a bellweather for what is in store for Tesla in Asian and North America once serious competition enters the market.
August 12th, 2020 at 9:42 AM ^
The reason that their numbers are so low in Germany are because they have a backlog of orders. They didn't produce cars for two months and were unable to send many shipments to the EU. They also typically sell more cars in the later half of each quarter than the first part. But I guess don't let the facts get in the way of your short thesis.
August 12th, 2020 at 9:03 PM ^
Hyundai had similar challenges but blew past Tesla so there's that.
The sales decline was over a 12 month period not 2 months. Their decline was both in market share and total units and I believe this will be a pattern that will repeat itself over and over in various markets. We shall see!
August 11th, 2020 at 3:27 PM ^
Full disclosure, admitted Tesla fan here. Tesla does not do everything perfect and they are definitely learning as they go. That said, I bought a Model 3 in 2018. In over two years, I have changed the tires once and taken it back to the service dept one time for a glove box that rattled a bit. That's it. Everything else has been so easy. Pull into my garage, charge over night, get in and drive and never stop for gas. No oil changes. The few times I have gone on extended road trips, the extra 30 minutes due to charging was outweighed by feeling so much more refreshed on a long trip from being assisted by autopilot along the way. It didn't feel like I had been driving for 7 hours.
The technology (including free updates), ease of use and fun driving factor is so far ahead of my previous vehicles (BMW, Acura, Honda) that I will never willingly buy a new, non-EV car again. I will definitely pay an "EV premium" when it saves me time, gives me much better performance and updates my car so that 2 years later it's just as good as the new models. I may look at other EV competitors in the future but no way am I switching back to gas. Ask me right now to trade my two year old Tesla for a brand new, loaded BMW 5 series and I would say no.
August 11th, 2020 at 3:40 PM ^
Agreed. I don't see myself going back either. As the options increase over time, the charging networks expand, the thought of going back to gas/oil will likely only occur because of having a hobby car perhaps, certainly not for my daily commuter.
August 11th, 2020 at 3:34 PM ^
legit competition in the EV space will continue to greatly improve the product
I'm on my 2nd Tesla Model S - both were the best vehicle I've ever owned/drove (and both have been virtually maintenance free), but I'm not married to 'the brand' and definately would consider other carmakers EVs... or even an internal combustion vehicle... though, for my vehicle needs, I cannot beat the convenience and simplicity of EVs
August 11th, 2020 at 3:43 PM ^
The electric vehicle company I have been watching closely is Rivian. They seem to take the "under promise and over deliver" approach and have been very methodical in releasing information about their upcoming line of vehicles (the R1T and R1S). The vehicles look great as well, and the stated performance is incredible. Should they decide to go public any time soon, I will definitely be jumping on them early.
August 11th, 2020 at 3:54 PM ^
So UMProud shorted Tesla too?
:)
August 12th, 2020 at 9:47 AM ^
Or was it JeepInBen? I'm confused here.
August 11th, 2020 at 4:28 PM ^
Would be nice if some other US carmakers could make a competitive electric, but they're still dragging their knuckles.
August 11th, 2020 at 5:33 PM ^
Tesla would be just like every other car company if Ford, GM, etc also owned the gas stations, the oil companies, the auto insurance companies, the tunnels, the ability to fuel up your car from the sun at home, etc...
I agree that Tesla is overvalued right now. The stock is valued with the future in mind right now. Battery day is also coming up next month with a lot of promise for huge battery news.
August 12th, 2020 at 9:51 AM ^
And if the Big3 built their own engines, seats, computers, batteries (soon), and software in house.
August 11th, 2020 at 8:09 PM ^
@UMProud - been following Tesla since 2016 when an ex-girlfriend was the program manager for a supplier that was set to supply Tesla seats for the M3.
Tesla will eclipse Enron for the fraud perpetrated once this all comes down crashing down. The only thing that gives me pause is that DoD has implicitly allowed Musk to continue this charade because they do NSA level snooping/background checks for individuals who have clearance for national security related satellite launches, which SpaceX just recently earned a significant chunk of.
Your observation is correct in that EU sales for Tesla have completely crashed. I check NO/NL/SP registrations daily via EU-EVs.com. Chinese TSLA sales for July were 11K. Open question how much backlog demand exists in China, but for every market (US/EU) where TSLA initially entered, sales have subsequently collapsed. MY sales to date in the US have been extremely low, not even to half of where the M3 was X/months after the initial M3 launch. There are only so many interested EV buyers that don't already own an M3/are in this price range.
There's another major EV launch every 3 to 4 months - Ford will have Mach E in the US by October/November, a handful more in the US in 2021.
I've dabbled in long dated put options/managing theta - it's made me a small chunk of change.
August 12th, 2020 at 9:59 AM ^
We follow the same websites but have a different thesis, interesting. It's also worth pointing out that they are just getting started in China and they've been outselling their nearest competitor in the Chinese market 3:1 over the last three months. They also haven't entered most of Eastern Europe, Russia, Brazil, Southeast Asia, India, nor most small wealth countries outside UAE.
So lots of growth potential. Do you really think they would be building a massive factory in Germany if they didn't see a ton of growth potential in that country and its neighbors?
August 12th, 2020 at 2:19 PM ^
I think there are two classifications of people who follow Tesla. Those that trust Elon Musk. And those that do not. Given those biases, people can interpret data in whatever lens they want. Do you focus on the big picture and trust the vision that Musk seems to be putting forth? Or do you focus on the now and how the company is not overtly successful on paper. If anything, its more fair of a comparison to WeWork, who had a good idea but didn't know how to build a business and grew too fast too quickly. Musk has proven that he can build a sustaining business though. Look at Paypal.
August 12th, 2020 at 9:00 PM ^
Hello fellow data aficionado...I agree 100 pct about Tesla will go down in history as a fraud. Some people at the SEC should go to jail when this house of cards collapses for not investigating the non GAAP accounting tricks used to make them look viable.