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 2:02 PM ^
TSLA stock is going parabolic, waaaayyyy overvalued. The market for those vehicles is small and the extra cost of an EV does not really make up what you would pay in gas, especially at current gas prices.
August 11th, 2020 at 2:39 PM ^
I agree. Just wish I could've afforded some of the option calls in Q2; ridiculous how much money some people made on the pump.
August 11th, 2020 at 2:04 PM ^
Yes, but will you get a discount using your MGoPoints with any of those other car makers?
August 11th, 2020 at 2:04 PM ^
Forgot to add: ALL DUE RESPECT TO JEEPINBEN as this is his creation!
August 11th, 2020 at 2:08 PM ^
My thought is (as a Tesla owner) that you can't think of Tesla as a car company but more so as a tech company - and the comparisons should be to that of other tech companies, not their market competition. I say this because of the software for autonomous driving that they are developing (which is much farther ahead than any of their competition). It's likely that other car companies will end up buying this software/tech from Tesla to install in their cars rather than creating their own automomous driving tech subdivision. On top of that, no other car manufacturer offers super charging (which from my personal experience, can make a 8-10 hour charge on my car into a 30 minute charge - which should be the future from here on out). On top of that, there is always optimism in a company headed by Musk, who has proven multiple times to be a revolutionary in a multitude of industries. Tesla seems to be a reflection of that.
August 11th, 2020 at 2:18 PM ^
I appreciate your perspective as a person who owns one of these vehicles. I would respectfully disagree and say that Tesla is very much a car company and makes a tangible product. Without the vehicle they would not exist in their current form...if they magically changed tomorrow into a software company and battery supercharger maybe they would fit that moniker.
If their car sales implode their company implodes. If they stop making cars and focus on software or superchargers they are even more vulnerable as everyone is developing autonomous vehicle software including non-car companies.
Software always gets supplanted by new ideas we've seen that over the last 40-50 years and Tesla will not be the exception. Battery technologies are rapidly evolving and the current generation of batteries that Tesla touts could, and probably will, be obsoleted overnight by new designs.
I think Tesla's situation is very similar to Blackberry and, while they are still in business, they are a shell of their former high-flying self. Tesla's leadership in the areas you cite is tenuous and not sustainable given the experience and money being thrown at developing alternative solutions by global competitors.
August 11th, 2020 at 2:35 PM ^
All fair points, many of which assumes that Tesla will be a static player in the field and not an innovator (Blackberry vs Apple). So far, I would argue that Tesla has been an innovator in the field and their company has evolved over time (from EV car efficiency to charging efficiency to autonomous vehicle tech). I guess one could argue whether or not the EV market is the future or not (I believe it is). If it is the future, Tesla has quite the head start on most car manufacturers. Now I don't totally understand the car market and sustainable business models but as an Architect/Urban planner, I know that cities are investing a great deal of money into EV charging (in Boston, 25% of all new parking spaces are supposed to be EV ready). I also believe that autonomous vehicles will be the industry standard in the future. Something that gives me optimism in the company is that they are right now the leader in three separate but related markets - EV cars, EV Charging, and Autonomous driving. Will they stay there? If I knew, I would be very wealthy.
I guess we are seeing Tesla as two different companies. You seem to be suggesting that they are no longer innovating. I know (as an owner) that they plan to roll out full autonomous driving within the next year or so (meaning side street driving, summoning, etc) and that their super chargers are quickly popping up all over the world. Obviously there is competition for every industry but I think there is equal a likelihood that Tesla is the Apple of the car industry rather than the Blackberry.
August 11th, 2020 at 3:26 PM ^
Tesla is not the leader in autonomous driving. By all metrics it is Waymo. https://www.autonomousvehicletech.com/articles/2399-navigant-research-recognizes-four-leaders-in-the-development-of-automated-driving-systems
The one thing is we clearly do think of Tesla as two different companies. You think they are a potential apple, I think they are a worldcom. You think Elon Musk is a new Steve Jobs, I think he is Elizabeth Holmes. I could go on and on over how big a fraud Musk is and the company as a whole, but there is no point.
How many times have you taken your car into the service center for repairs? How often do they perform warranty work and call it goodwill?
Honest question, what companies have had this many vocal shorts screaming fraud that didn't eventually prove to be a fraud?
I get it isn't easy to think of them as a fraud when you drive their car and it is actually really cool and fun, but their fraud is with regards to their book keeping, not the fact that their cars aren't cool. Also they committed fraud with solar roof as a reason to bail out solar city, but we will see what happens with that lawsuit. Feel free to read the depositions and tell me it doesn't sound like a blatant bail out of his family members.
August 11th, 2020 at 3:35 PM ^
I will answer. I have had my car for 2 years, 3 months. I took it back one time to fix a rattle in the glove compartment. That was two years ago. Since then, I bought a new set of tires. That's it. Haven't been to the Tesla service center in 2 years, no oil changes, nothing. Never have to stop for gas on my way home. So far, this car has saved me so much time, hassle and stress.
And the service I received was top notch. More caring than most most dealerships I dealt with before.
August 12th, 2020 at 9:20 AM ^
I dont know the sources for the original poster, and how credible his sources are - but Tesla is much further/advanced in so many technoligies regarding electric cars. Their stock is booming for a reason - and his writeup sounds like a collection of articles written by either shorts, or people who already missed the boat. Tesla, and the way they do things - is so advanced compared to competition.
Im following the electric car revolution as close as i followed the solar boom (and invested in it) and from all my hundreds - YES hundreds hours of research - Tesla is beyond everyone else, and continually putting them out of business or forcing them to scrap the electric division. Their products are amazing, and it is NOT just the electric car that im talking about.
August 11th, 2020 at 3:25 PM ^
Just wait until we are all buying our internet from them... and drive thru tunnels that they are digging... and have solar roofs that charge our self driving cars... and ride on rockets instead of planes... and fly to mars...
August 11th, 2020 at 3:39 PM ^
I actually did a case on this in business school. The prevailing thought on Tesla's future is that their real competitive advantages are in fuel (i.e. the supercharger network) and software (i.e. autonomous driving).
The fact they are making EV cars acts as the industry wide catalyst to drive companies toward their software/fuel services.
As a thought exercise, imagine having significant head start on a country wide gas station infrastructure AND have patents on engines in a horse and buggy world...you'd do everything you can to force as many people as possible to make cars. This is evidenced by Tesla making their EV technology patents public...they want as many EV cars on the road as possible because their money will be made on autonomous driving software licenses and charging.
Tesla making cars is a means to a way more profitable end. And current stock prices reflect that bet...so their benchmarks aren't traditional auto makers.
August 11th, 2020 at 3:54 PM ^
Thanks for this post. This honestly makes total sense to me that legitimizes both their stock price and their short comings as a auto maker. Revolutionizing the auto industry was always going to be a tall task. And people have doubted Tesla and Musk ever since Tesla came out. I think this is truly their endgame. The automaking aspect of it is just a means to an end.
Revolutions always have skeptics and haters. We will see in due time what becomes of Tesla. I don't think you can make the claim that Musk is a fraud though. Paypal revolutionized how we shop online, Tesla revolutionized how we drive, SpaceX will revolutionize how we travel, and neural lace will revolutionize how we think. Strap in.
August 11th, 2020 at 4:29 PM ^
Yeah and to the points above, other companies like google, Apple, and Uber have been attempting to create autonomous vehicles for at least 5 years now. Turns out having a large fleet driving in the real world gives you a huge advantage in the data you can collect and the debugging you can do.
Tesla is a car company, but also an energy and technology company. The powerwall is a great alternative to a noisy generator. They still innovate even if they aren’t Apple. The supercharging stations give them important future proof infrastructure.
People have been trying to short Tesla for 10 years now. A Michigan student even started some Tesla hating club called TSLAQ. Fact is they keep finding a way despite all the constant predictions of doom. You could find this same OP posted 100s of times over the year.
All that said, I think Elon may have gone insane. He was always a weird guy, but now if he wasn’t rich, he’d be in a psych ward.
August 11th, 2020 at 2:11 PM ^
I'm just here to say that Elon Musk is a shit human being
Carry on
August 11th, 2020 at 2:13 PM ^
Musk built a company that does this...
Tesla will be fine.
August 11th, 2020 at 2:19 PM ^
Agree that is badass but more competition is coming...which is awesome! Who would have imagined commercial competition for space flight? It's like living in the late 1400s when everyone was racing to the new world.
August 11th, 2020 at 2:23 PM ^
I agree with you on all points. This is simply badass tech.
If we succeed in becoming an multi-planet species or multi-stellar species it's due to people like Musk.
August 11th, 2020 at 2:31 PM ^
Agree the guy is a pioneer and visionary on spaceflight. That rocket reverse landing on such a small footprint with all the variables is absolutely mind-blowing. The engineering and computational expertise to achieve that is nothing short of miraculous.
August 11th, 2020 at 2:21 PM ^
That is a truly remarkable piece of engineering.
That said, SpaceX is not exactly operating in a low-margin business against cutthroat competitors with over a century of expertise in manufacturing the product.
August 11th, 2020 at 2:24 PM ^
And that is what makes how well Tesla has done (to date) all the more remarkable.
August 11th, 2020 at 5:32 PM ^
Pretty sure the tech needed to run a gif backwards was not an Elon Musk invention.
JK!
August 11th, 2020 at 8:53 PM ^
NASA did this decades earlier - https://www.discovermagazine.com/the-sciences/dc-x-the-nasa-rocket-that-inspired-spacex-and-blue-origin
"But but but he landed it on an autonomous sea platform!"
Failure to land properly on the sea on a is certainly preferable vs having a failure in the dessert - but the economics of the launch program in landing it on the sea vs landing it on the dessert is negligible.
August 11th, 2020 at 2:27 PM ^
From a stock perspective, I jumped off the Tesla bandwagon a couple of years ago when it had it's big run in early 2017 -- I regret it a little when I see the current prices, but I made ~50% in 15 months so I didn't do badly either. I thought that valuation was crazy in 2017 given the fundamentals, and I think it is absolutely insane today -- I don't know what people are thinking with a market cap greater than 10 years of their current revenue, even if their accounting is on the up and up.
I like the product they make and think they're ahead of the game -- but I'm not convinced they'd even deserve their current valuation if they became an unregulated monopolist. Also, Elon Musk seems like an absolutely horrible person and my desire to become an owner of a Tesla car has waned in the past year. My next car was going to be a Tesla -- it still might in a year or two when I'm ready, but I'll definitely shop around more than I would have expected a year ago
August 11th, 2020 at 3:46 PM ^
If you're looking electric, the Nissan Ariya will launch right around the time you will be in market. Hearing 300 mile range and it won't be ugly:
August 11th, 2020 at 2:29 PM ^
Im waiting for the Blue Origin Bezos Amazon All Terrain Rum Runner
August 11th, 2020 at 2:30 PM ^
Folks who've read my posts on this subject in the past will know I am a huge Tesla skeptic. All of these things mentioned in the OP are true.
Tesla's advantage so far has been doing things before other people and operating in an area where they can afford to avoid most of the competition because it's a money-losing business and they can survive on Elon's riches and early deposits. I fully believe about ten other car companies could've built anything Tesla did, but chose not to because it's been a decade-long money pit and they have shareholders to answer to.
Tesla's supposed advantage in autonomous technology is a ruse, I believe. It's based on them going to market before others - but they've been up front about beta-testing their product on customers, which to me is appalling. It's amazing they're allowed to do this. Tesla puts a few little disclaimers out there about how you still have to pay attention to the road, but there are no safeguards. In contrast, GM's Super Cruise won't let you take your eyes off the road, period, and it disengages if you do (after a couple warnings.) Tesla does none of this. They're not further ahead, they're just putting unready technologies on the road and getting away with it where a GM or Ford could never have.
They're making a big bet on the Cybertruck....and they're going to lose it, IMO. For the first time, they won't be first to the market. Rivian will beat them (by a year) and Lordstown may as well. Ford will be close enough behind that Ford loyalists will happily wait. They're moving into a segment that the Big 3 will defend tooth and nail. The Cybertruck is likely to cannibalize existing Tesla sales, not create new ones.
That stock shows all the classic signs of a bubble. The main trick is guessing when it pops.
August 11th, 2020 at 3:01 PM ^
As an owner of a Tesla, I can tell you that there are the same safe guards that you refer to for GM's super cruise. If you are on auto steer, it prompts you every 30-40 seconds to nudge the steering wheel. If you do not respond, it will turn on a loud ring to alert you. If at that point you respond, it will not let you go on auto steer for a few minutes. If you don't respond after the warning, it will actually slow the car down to 30 mph and drive you to the shoulder of the road and require you to take a break from driving.
I think there are some fair points made here but not everything you mentioned is factually true. One big factor that I learned about with regards to Tesla and having a centralized autonomous vehicle program is safety. For one, the Tesla is on of the physically most rigid cars out there thanks to the battery that runs the underside of the car. In terms of autonomous driving, its no where near perfect yet but once the AI makes a mistake, it learns from it and can then relay that information to all Tesla's. For instance, a Tesla might rear end the car infront of it. Once it does that, it learns from that mistake and in theory no Tesla's should rear end someone in the same manor. Now compare that to your typical driver, who might rear end someone. It's not like we have a hivemind to then relay that information to every other driver. Tesla might not operate the best in terms of a business structure but I think they are still the top innovators in the EV/autonomous vehicle market.
August 11th, 2020 at 4:07 PM ^
Thanks for pointing that out about disengaging. I had not seen it on the Tesla website.
It's true that Tesla gets a lot of good data from crashed consumer cars, but IMO that's an unethical shortcut. Whenever their technology kills someone, they shrug their shoulders, say "we told you to pay attention" and argue that it's still safer than human drivers. Which to me isn't the point; the point to me is that ever since Ralph Nader it's been considered unacceptable to design cars in such a way that the car is the part of the equation that makes the mistake.
August 11th, 2020 at 4:59 PM ^
I agree that in general you don't want drivers as "beta" testers where life and death is concerned. Except that the car is virtually always part of the equation. Why don't automakers put every available safety feature on every car in the lineup as soon as it's developed? Primarily to make money. Is withholding a safety feature that has a clear safety benefit so much better than "testing" a safety feature when then end result is clearly less injuries and deaths if you held it back for two years while it was perfected? Not in my book although I understand that others will have different opinions. As airbags were being developed, there were clearly deaths and injuries that were occurring from the deployment of airbags. But the net benefit was clear.
August 12th, 2020 at 9:30 AM ^
You're just repeating TSLAQ talking points. Most of the OP's points weren't actually true or were taking bits of data to make a point.
August 11th, 2020 at 2:31 PM ^
Disclaimer - I've never been particularly optimistic about Tesla as a mainstream car developer.
I thought it was pretty well understood that Tesla was using some creative accounting with what they reported. At least when I've spoken to people in the auto and/or financial industries most side-eye their numbers pretty hard. Similar to how people view some of the gig economy services like Uber and DoorDash claiming they'd be profitable if only (insert something other companies have always had to deal with but these guys feel is unfair).
Tesla has some interesting tech and I've seen a decent number of them on the road but I don't think they have a strong enough brand (and Elon Musk's, well, stink absolutely turns some people off) to thrive against increased competition to the degree they need to in order to really break through. I may be wrong, but this doesn't surprise me.
August 11th, 2020 at 2:32 PM ^
What is the point of this post? Is this talking about cars, or talking about a financial investment in the company?
i agree the stock price doesn’t make sense right now, but the car is the best vehicle I’ve ridden in at its price point. As an owner and would have purchased another had Covid and working from home not been a 2020 thing, I find it amusing how people like to talk bad about the cars despite never having been in one. It’s great a company was able to come out and successfully create an electric vehicle as an alternative to more popular gas driven models.
Why aren’t people upset with the big 3 and their ancient management for not building an exciting electric 10 years ago? If you’ve never driven one, take the time to schedule a test ride and then comment on the company. There’s a reason they have so many repeat buyers and people are willing to pay the higher price for them.
Also, it’s not all doom and gloom for the company. The automaker with the most to lose is BMW. As Carscoops recently pointed out, Tesla sold more Model 3s in the US in 2019 than BMW sold sedans from its 2, 3, 4, 5, 7 and 8 Series combined. Tesla delivered 127,836 Model 3s between January and November (as estimated by CleanTechnica), while BMW delivered 116,073 units of its popular sedans (according to BMW North America). And, while BMW and most other brands are seeing declining demand for sedans, Tesla just keeps going and going - it hopes to deliver between 360,000 and 400,000 vehicles worldwide in 2020.
August 11th, 2020 at 3:36 PM ^
It's unlikely Tesla is going to deliver 360k-400k cars globally in 2020 considering they've delivered 88,400 in Q1 and 90,650 in Q2 (that seems to be all vehicles combined). Obviously COVID-19 played a big role in that, but Tesla also seems to play a bit fast and loose with "sales" so I guess deliveries are the closest thing we've got. What I've gathered, reading here and elsewhere, that there tends to be a decent lag between "sale" and "delivery" of a car, so deliveries from Q2 might well have been based on sales in Q1 or even Q4 of the last year depending on what was ordered.
Tesla the wall street entity has always been different than Tesla the auto maker, and that distinction has always given me pause. I'm glad you've had a better experience with them; the one time I rode in their Model 3 I was...unimpressed. It was a fine car but at nearly $40k I sort of expected a better interior and a slightly nicer ride. I do give the company credit for helping to push along a move to more plug-in vehicles but I've gotten a bit tired with the breathless commentary around them. I think it's telling that I've seen a number of sales and promotions for Tesla even before COVID-19 shut everything down. There might have been a decent chunk of pent-up demand and now they've entered the part where they need to convince people to switch to them and it's getting a bit harder.
August 11th, 2020 at 3:57 PM ^
I don’t have a problem with Tesla cars. They’re pretty sweet and innovative, just too expensive for my taste in vehicles.
As for the Big 3 automakers, they have produced various versions of electric cars in the past 40 years (e.g., the EV1, which is kind of interesting model FWIW), they’ve just never had a need or caught on.
August 11th, 2020 at 2:33 PM ^
Shorting the stock I see?
August 11th, 2020 at 3:31 PM ^
Ha -- beat me to it.
August 11th, 2020 at 5:08 PM ^
Up 7% after hours after announcing 5:1 stock split.
August 11th, 2020 at 2:35 PM ^
My Tesla story. This past January I decided by 2014 Chevy Silverado was getting a bit long in the tooth to be my daily driver (have about a 70 mile roundtrip commute each day to the office) as it was over 115K miles and things were starting to wear down a bit. So I started looking at various vehicles and really liked to Tesla a lot. Driving it, if you can call it that, was unlike anything i've ever experienced so I decided to order a Model 3 and selected the auto-pilot and Sport option which turned a 35K car into a 70K car. I put down my $100 build deposit and ordered it on line, no discounting or haggling. They would send me a text when it was built and on the way.
Last week in February I got the notice it had been built and would be delivered around the 2nd week of March so I decided to order a home super-charger and had an electrician come in and wire up my garage for charging. That cost about 1K all in and took about a day to get completed.
First week of March I get the text the car would be delivered around March 20th which was perfect because we were leaving for a ski trip on the 21st so I could get the car right before we left.
March 17th I got the notice that it would be in on March 19th and ready for pickup so I scheduled a ride up to the dealer to pick up my new, exotic toy.
March 18th the world basically ended as the Governor of Ohio issued a stay-at-home order thereby eliminating the need for any car as a daily driver because I wouldnt be driving anywhere for quite a while. So I cancelled the order, one DAY before pick-up and still drive the truck.
Note: Tesla must be feeling some pain here because they now DO discount the cars, at least the one I had ordered, as they'll be happy to knock 3K off the purchase price if I still want it. I dont but they keep asking.
August 11th, 2020 at 2:39 PM ^
I did the same on our 2nd order with them. Given my wife and I working from home throughout the end of this year at a minimum, no point in owning 2 new cars.
August 11th, 2020 at 2:40 PM ^
I can't comment on Tesla's accounting, but I'm a Model X owner and have never been happier with a car. I don't know what Tesla will look like 20 years from now, but I'm pretty sure EV's will dominate product lines for most of the car companies by then and that's what really matters. Without Elon Musk and Tesla, that timeline would be much different.
August 11th, 2020 at 2:46 PM ^
Funny thing is they keep realizing more “gas credits” from other automakers in their revenue each quarter. These credits are paid to Tesla so the companies can meet required gas mileage standards with their vehicles.
August 11th, 2020 at 2:41 PM ^
I don't own one, but I've talked to people who do, as well as those who've owned Volts and Leafs. The performance, range, and fit and finish is exemplary. The styling is subjective but in California at least, they have become a status symbol.
Gas prices have been depressed for some time and demand has still been strong, what do you think a big spike in oil prices due both to wholesale prices and the inevitable gas tax increases will do to the equation?
August 11th, 2020 at 2:46 PM ^
Whoa, fit and finish, stop right there. It's certainly possible - probable, even - that individual cars turn out beautifully. But on the whole, Tesla is known for having the worst quality and fit & finish of any carmaker outside of maybe a Mitsubishi or something. And it has improved markedly, but they are still at the bottom of every quality report. People are just willing to overlook quality problems that they wouldn't with other automakers.
August 11th, 2020 at 2:54 PM ^
I'll defer to you. The handful that I have looked at were immaculate, paint job, gaps in doors etc. But that is a very small sample.
August 11th, 2020 at 3:13 PM ^
FWIW, my Tesla Model 3 is much more solid and refined than the BMW 3-series I owned before it.
August 11th, 2020 at 4:11 PM ^
How can you judge reliability in just over two years of ownership? Almost all cars have no issues two years in. The long term reliability is what people are interested in - as in, ten years down the line.
August 11th, 2020 at 5:38 PM ^
Well I think the post above was talking about initial fit and finish and initial quality. But yes if you want 10 year reliability I have little to offer. The car is completely new as of 3 years ago. I don't doubt there will be some little things and maybe major things. But an electric motor should in theory be less likely to experience problems than a full gas engine. And the battery tech is relatively proven (yes, relatively). There may be body and component problems but people that have torn apart the vehicle seem to indicate that it's well built. That's all I can go on for now.
If I was completely risk averse, I would get a civic or a camry.
August 11th, 2020 at 6:10 PM ^
Thanks for the perspective. I greatly appreciate it.
August 11th, 2020 at 2:58 PM ^
I own a hybrid Fusion and can attest that getting 42 mpg with a comfortable car is well worth it for a 110 mile commute. I would love to have a Tesla, but the range bothers me - it's too short. I don't want to be worried about charge level on a basic commute, especially on the days when I have to go from my usual building to my corporate building before heading home. That turns 110 miles into ~170. I'm not going to trust a paltry ~200 mile range with that!
Nonetheless, Tesla forced everyone else into mainstreaming EVs, so good on them. I do wish that they could sell cars the same way others do, though - with storefronts. Unfortunately, the Big 3 have forced laws that say manufacturers must support a dealer network - which Tesla doesn't want to do. Michigan, for instance, has enshrined into law that dealerships must be on contract to sell vehicles, and that no manufacturer can directly sell their own product.
I wonder how well Tesla would do if they could sell cars on even footing with their competition?