This move to China makes sense for a niche automaker struggling mightily in the US. But headwinds in China are even stronger than in the US.
By Wolf Richter for WOLF STREET.
Tesla doesn’t disclose deliveries in the US, unlike other automakers. It only discloses global deliveries. We have to look at other data to see how Tesla is doing in the US; and in the US, deliveries have been plunging in recent months. In California, by far Tesla’s largest market in the US, registrations of new Teslas in the fourth quarter plunged by 46.5% to just 13,584 vehicles, from 25,402 vehicles in the same period in 2018. Model 3 registrations plunged by about half to 10,694 vehicles.
This is based on DMV registration data, compiled by automotive registration-data provider Dominion Cross-Sell, cited by Reuters.
The reason commonly mentioned for the plunge in sales in the US in recent months is the phase-out of the $7,500 federal tax credit in 2019 for Tesla’s vehicles. In Q1 2019, the federal tax credit fell to $3,750; in Q3, it fell to $1,875. And as of January 1, this year, it’s gone completely, though some state incentives are still available. In response, Tesla cut prices and came out with cheaper versions of its models, but to no avail.
The other and more troubling theory is that most people who had always wanted a Tesla and had waited for years in the deposit-line to get their Tesla, now have their Tesla, and the “pent-up” demand has been filled, and Tesla would have to get down and dirty and sell cars the hard way.
Instead of trying to slug it out in the declining US market, where its market share is just 1.3%, and watch its unsold vehicle inventory pile up, Tesla then chose to ship its US production to other countries. Makes sense. But soon those markets will be saturated too by the pricy niche-vehicles, and then the issue is how to go forward?
So Tesla decided to seek salvation in China in a big way, like GM had already done over decade ago.
Step 1: Built and Funded in China.
Tesla built its “Gigafactory” in Shanghai. Like all buildings in China, the factory sits on land that belongs to the state and is leased from the state. The factory was funded mostly by loans from a consortium of Chinese state-owned lenders. The last package of loans totaled $1.63 billion, according to Tesla’s filing with the SEC in late December.
The funds may be drawn in Chinese yuan or in US dollars. The package comes in two parts:
- A term loan of RMB 9.0 billion ($1.3 billion), secured by the factory, its equipment, and the lease. Of that amount, RMB 3.5 billion was used to pay off a prior bridge-loan from those lenders.
- An unsecured working capital line of credit of RMB 2.25 billion ($330 million) to fund production at the factory.
Step 2: “Designed in China”
Now Tesla plans to open a design and research center in China to design “Chinese-style” vehicles, according to a recruitment notice that was posted on Tesla’s official WeChat account on Wednesday and reported by Reuters. According to the notice, Tesla wants to recruit designers and other staff for the design and research center. The deadline for submitting applications is February 1.
The note said:
In order to achieve a shift of “Made in China” to “Designed in China,” Tesla’s CEO Elon Musk has proposed a very cool thing — set up a design and research center in China.
Tesla has not announced the location of the design and research center, nor when it expects it to open its doors.
Tesla’s market share in China, the largest market in the world, is essentially 0%. The Model 3 is a car, as in “sedan,” not an SUV, and cars have gotten tangled up in Carmageddon, even in China.
In the US, “car” (sedan) sales have collapsed by 40% from their recent peak in 2014, as consumers switched to SUVs, compact SUVs, and trucks, whose sales have soared. The idea for the Model 3 – a smaller less expensive version of the Model S – was hatched before the Financial Crisis. But now this is what the Model 3 is up against in the US – with the Model 3 being part of the red line:
Similar patterns are playing out around the globe, including in China. Tesla is countering this trend with hopes that its future compact SUV, the Model Y, when it will be finally available for sale, will have better luck than its immensely ill-timed – at least five years too late – Model 3.
In China, there is another thing: When the idea of the Shanghai factory was hatched, China was still piling huge incentives on EVs, and the EV market was booming. But China has now curtailed the incentives, and suddenly, beginning in July last year, the boom in EV sales fizzled.
And in China, there are hundreds of EV makers. Every global brand is now building EVs in China for the Chinese market, from the top luxury brands on down. For the first time ever, Tesla will face real competition in form of a full range of models of EVs that have been mass-produced by global automakers.
In addition, passenger-vehicle sales in China fell nearly 10% in 2019, the second year in row of declines, as the market, that had been booming for three decades, is retrenching.
On the positive side of the ledger: In China, luxury still sells, and the luxury brands had growing sales in 2019. But they too are now all coming out with EVs, not just cars but a broad range of SUVs and compact SUVs, and these automakers know how to get down and dirty and slug it out in a touch market. So Tesla’s shift to China might not be quite the entry into automotive nirvana.
“Challenging environment with weakened consumer demand”: This nosedive in a vast industry, affecting consumers and manufacturing, is happening even as GDP officially booms at 6%? Read… China’s Consumers Slam Automakers, Sales Drop Hard, 2nd Year. GM Sales Plunge. Ford Sales Collapse. But Luxury is Hot
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Let’s see…Increase fed balance sheet. Squeeze shorts. And thus, real numbers no longer seem to matter.
Producing Tesla shares is much more profitable than producing cars.
From what I’ve read, isn’t there an “uppity / status conscious streak in the Chinese consumer? (If so, not only pathetic on all sides, but this may prolong the inevitable a bit for Tesla. But I believe China’s days in the sun are quickly setting and they will experience a crash similar to what Japan experienced in 1990 onward…the Nikkei hasn’t recovered in 30 years….I guess Japan’s BoJ _ and they have pumped mightly – should take lesson from “our” Fed. Clever criminals the latter.
Yes, there is a very strong “uppity / status conscious” streak. I spent several years working closely with a team of Chinese engineers, frequently visiting their site in China (Beijing) and with them occasionally visiting my site in the US. They all had a strong ambition to get a driver’s license and a car. They looked forward to it, were planning for it, and saving for it over many years–the same way an American might plan and save for years to buy a single family home.
They could not understand why I, who made 5x or 10x what they made, drove a utilitarian Japanese sedan, when they were all hoping to buy something fancier–perhaps an Audi or Infiniti–a car representing 1 or 2 YEARS of income for them. They expected I’d have a BMW or Mercedes, simply based on my ability to afford it. When I explained that I had no need for such a car, it didn’t register. I was making a statement that simply made no sense in their worldview. Because the primary purpose of a car purchase, in their minds, was to demonstrate status, and “need” was irrelevant.
Thanks Pantrax, for very useful information and insight into the Chinese consumer psyche. Which unfortunately seems to be even more empty of rationality that that of Americans, British, or Europeans.
That’s it, folks. Tesla has found the dumbest consumers on the face of the Earth. That is their rescue plan.
Musk is the ONLY billionaire entrepreneur in the US, that we know, who is actually creating something new. Unlike several billionaires in America who sit on their huances doing NOTHING except to earn easy $$ for themselves. You know their names.
BTW, the Fed Repo this morning had almost a 4:1 Agency (MBS) to Treasury Ratio and the MBS had a rate of 1.55% also. Never happened before.
MM rates are dropping, which was one purpose of Feds REPO using T bills. The spread (MM to savings) widened, investors moved out of savings and reserves started to drop. Rumor is Feds next target is the middle of the curve,(MBS) In 2011 they put on Twist and markets dropped 20% (after being up 50% two previous years) YC flattened notably. Financials took the worst of it. 2009 GDP was negative, 2011 number lurched backward. Many similarities to present. YC could reinvert here..
MMF are still quite high. The Fed has been buying the 26 and 52 week bills in the market. Not sure what the funds are holding. But the rates must be dropping since the 1-3 month bills did already.
Assets of Money Market Funds
Billions of dollars
Date 1/15/2020 1/8/2020 $ Change* 12/31/2019
Total 3,630.40 3,637.58 -7.18 3,631.64
Retail 1,379.21 1,379.79 -0.58 1,370.04
Institutional 2,251.19 2,257.79 -6.60 2,261.60
Tesla has a potential to make a lot of money just from their charging stations, in a few years there will be millions of Tesla owners who charge their car on this stations.
And it would probably not be long before they have their own App-store witch could generate a lot of income.
I’m not a Tesla owner, or a shareholder, but I kind a believe in Tesla. Just as I did and still do with Apple. Remember back in the days not that long ago where Nokia was the biggest of them all…! Look at them now.
So here is a problem with your theory: EVs are great if you can charge them up at night in your garage, no wait, no trip to the gas station, no dirty hands, and ready to go in the morning. But if you do NOT have a garage, an EV becomes more of a hassle, and instead of having this inherent advantage over an ICE car (no trip to the gas station), it suddenly has a disadvantage (trip to and waiting at the charging station).
A friend of mine has a Leaf and street-parks it in SF. So he has to go to the charging station every day (older Leaf with shorter range, and he has a fairly long commute). He prepares for it, brings his laptop, gets some work done, buys coffee, etc. But it’s still a hassle.
I think that the majority of the first big wave of EV buyers will be people who can conveniently charge their EVs in their garage; they would use charging stations only when they go on a long trip. And there will be a much smaller number of EV buyers who are street-parkers, and who have to tough it out at the charging stations. Given that Teslas are an upscale product, I would imagine that the majority of Tesla buyers would also have a garage (at their house, apartment building or condo building) where they can charge up their vehicles.
There is a charging station with multiple posts down the street here (San Francisco), and I rarely see a Tesla there. I see more Leafs and Bolts and some others. But the charging station is rarely full. Often, there is no one. So there is not a huge demand for charging stations, though there are tons of EVs in San Francisco. This to me confirms my theory that the majority of EV buyers have a garage where they can charge their EVs.
You can recharge a Tesla at a none Tesla charging station.
Appstores make their money with games and their monopoly position. Cars are not a good place for games and misusing your power for max $100 on a multiple 10k car is dumb.
ps Nokia is coming back slowly
Is Tesla not fooling everyone?
Its now worth more than VW!
I live in the East Bay where Tesla’s are all over the place and charging stations are present in some malls.
I have friends who own and love them. I have other friends who had to wait for months before getting their car repaired.
The stock is priced beyond the stratosphere ;I am positive that the stock will trade considerably lower within the next year. The only problem is borrowing the stock
Have you noticed that the Tesla store in the Broadway Shopping Center in Walnut Creek, CA is boarded up? This shopping center is one of the most successful retail areas in suburban California, perhaps second only to Beverly Hills.
so were do they dump these huge paper weights when they die?
heard NO ONE WANTS THEM since they can’t recycle batteries
talk about NOT BEING GREEN
I will be in Walnut Creek next week. I will try to look at the closed Tesla store. Your observations about retail stores in Walnut Creek sound correct.
The Whole Foods mall on Ignacio Valley rd is not large, but it has a number of high speed charging stations
That is not a Tesla story but a retail story. Why is the store not filled with another store is the real question you should ask. Selling cars in malls is only a pop-up kind of action. Those were not meant to last. See how other car companies use malls. Malls are used as an advertising opportunity to introduce people that they could buy car/brand X, not as a sales location. What Tesla sells are all things (cars, batteries,solar roofs) that needs a lot of interface time between salesman and buyer. Those are not things that are normally sold at the mall.
Tesla has the second largest market cap. Toyota being the first, Vw now third.
Not bad for a company that is only predicted to produce 600k cars this year.
VW by comparison produces 11million a year.
If Tesla doubles production every year it would take another 5years to reach VW volumes.
We live in interesting times
Without the Fed river of cheap (or no cost) Money Tesla would be only another documentary like the other one!
So in a sense, EM is the luckiest SOB out there. This era must be the only time in history where this kind of business anomaly can stay alive for so long.
“VW by comparison produces 11million a year.
If Tesla doubles production every year it would take another 5years to reach VW volumes. ”
But Tesla sells high-end luxury vehicles – a segment with high profit margins. Oh wait…
Seat and Skoda, Polo and Up! are not in the luxury segment of the car market. VW maybe in the US but in Europe they are mainstream
If Tesla doubles production every year…..then they will need even more money from “investors”.
Good luck with anything that resembles that in the slightest way.
Note sarcasm please.
It is obvious that the EV subsidies goose the sales. Good luck to the $TSLA bulls.
I’m not sure how the Tesla’s of the world will fair in the ESG movement. Nobody talks about the waste they leave behind when the battery has to go to the land fill.
That is because they don’t go to the landfill. At least Tesla recycles theirs. Most of all of them will be recycled.
recycled as Powerwall or similar products and then to the landfill, just 10 years later?
still, it’s nothing compared to the problem of nuclear waste dumps …
Re-use is better than recycle but the battery packs are big so they will likely be recycle.
As of about a month ago, that Austrian guy, I think it was in Austria, who crashed and burned his Tesla last year, could not get anyone to take his Tesla, not even the Tesla recycle partners. I think this might become a problem.
If you think all the chemical waste from the battery “re-cycling” is bad, you should take a look at the lithium strip mine after they’re done…..
Really. do you have any idea about lithium mining? Most of it is “mined” by pumping it up in slurries from underground. Where did you ever get the idea about it being strip mined? Unless you are confusing it with coal, perhaps?
Agree; I heard that a relatively huge number of Tesla’s has been sold in Netherlands end of last year because of changing EV taxes/subsidies.
EV’s make some sense in dense city environments because they cut local pollution, and most users probably only drive relatively short distance. But that is not what the average EV is used for. These cars run on subsidies, they are way too heavy (thermodynamically wasteful by definition) and in the big picture contribute very little to limit CO2 emissions. Add the future recycling problems and high environmental production cost and the net contribution may be negative (price is usually a good indicator for energy and environmental cost of a product).
BTW, I noticed my favorite Aptera is back, updated as an EV; probably just a much vaporware as the original (for whatever reason).
Until now all the improvements in battery tech went into more range. Range is now good enough so all improvements will go into less weight. Your assumption that EV is inherently heavier than ICE is IMHO not correct especially considering the regulatory need for ICE to be hyper efficient like a Prius.
Materials science! It already gave you long lasting gas engines (eutectic like silicon alloy pistons that expand same as cylinders, 5W oil works fine). So if they can come up with even better ones for a turbo and also run the whole engine really hot (ceramic alloy or pure ceramic?). Both will really up the efficiency (although high heat is where the NOx comes from with as is gas, so more cat design maybe?
Not sure that pursuit has hit any dead ends yet.
The Model Y (CUV based on Model 3) is due in a few months in the US so most are waiting for it. Either way, Tesla is selling every car they can make. Whether her or abroad so this is not a good metric to look at it.
Still overvalued by any metric. But how is that different than anything else in the market?
It’s different in comparison to other car manufacturers. The very thing it is trying to be, unless you are saying Tesla is not a car manufacturer but just a new App for the “share” and “gig” economy. But then Tesla has to stop selling cars and start sharing them. So, this is different than the market. In every way. The only thing like it is Bitcoin in a way.
Just wondering what you think overall about Tesla. I was listening to the short argument and it’s convincing.
But what if Tesla’s market cap is so high because they aren’t a traditional car manufacturer. I was reading that Tesla collects all real life driving data and there is probably lots of value there.
What if Tesla is at the center of a paradigm shift?
It seems to me that Tesla could design a platform that could be licensed and manufactured by Tesla. Then OEMs can customize the exterior and interior to what they like.
Foxconn already does this for laptops and cellphones, and electric cars could easily go this route with their simplicity and if manufacturing can be mostly automated.
I wouldn’t buy Tesla stock, but I wouldn’t short it either.
What I think about the stock? If Tesla is ever able to make an annual net profit of $1 billion (not make $1 billion in one quarter, then lose $1 billion in the next), at that point its market cap should be around $10-15 billion. Today, being far from that $1 billion in annual profits, its market cap is over $90 billion. So that’s the magnitude of the extent to which I think the stock is overpriced.
Tesla is a minuscule automaker and a solar-panel maker. These are very tough industries. The auto industry is brutally mature. Every car you sell comes at the expense of someone else who wasn’t able to sell a car. So it’s real battle. And Tesla is smacking into this issue. See its declining US sales. The other automakers are going to eat Tesla’s lunch, from both sides, from the high end and from the lower end.
What price to sales would you give Tesla?
I wouldn’t :-]
With Tesla, I want to see if they can ever get to an annual net profit, and if they can repeat it the year after that, and I want to see if they can grow their revenues while making annual net profits. Tesla has some huge challenges. It has already burned about $25 billion of cash, and it needs to prove to me that it can be a profitable cash-flow positive enterprise on an annual basis, rather than just a cash-burn machine.
Traditional ICE market is mature, EV’s are not a mature market. Tesla choose was to sell the cars in the Dutch market and not the American market. A wise decision IMHO
I guess Tesla has the edge for selling EV’s to Martians in a few years; maybe that is priced in ;)
The reason why Tesla is unprofitable is because they are building a Denso. Yes, this is idiotic to start a business in a not exactly profitable segment but if you have free money, don’t need to show a profit and allows you competitors longer to waste time then it is not unwise.
Tesla should be able to make 10% on $30 billion turn-over without making Tesla’s Denso. American stock-market is just overvalued so $90 billion with $3 billion profits is not that weird. For really how could they pay that for that company look at Ford and Fiat
Just so you know, Tesla isn’t the only car manufacturer with GPS and data collection installed in it’s vehicles. The manufacturers with the most cars on the road offer the best value because they have more users and data to sell so that’s out.
Platform? Like seats and a cab with a dash? Henry Ford beat Tesla to that punch a few years ago I think.
Everyone in the real world is looking at California and found at a loss for words as to how to explain the insanity. Every time there is a tech bubble it happens to bring some weird stuff out of California. Not the products, but the marketing scams to sell the products. Like they are trying to sell snow to an eskimo.
You are correct, but you’re leaving out the fact that Tesla collects far more data than anyone else. Among other things – they have the ability (and have been proven to do so) to send data pull requests to the cars to populate self driving machine vision databases.
Tesla does not pull more data than GM or Ford or even Chrysler. Per car they use more data walls but they don’t make up for the competition covering 100% of the nations they sell to with GPS tracking on millions of vehicles compared to Tesla covering the rich neighbourhoods in major metros with only thousands of cars. Not one Tesla can report data for a single mile in North Dakota for example, but the competition can. Meanwhile in California, Tesla is sharing data that the competition is already collecting.
Sorry, but you’re totally wrong.
Other car makers do not have the capability to send out data pull requests to all the cars in consumer hands. This data isn’t just GPS, it is sensor data related to Autopilot.
Other car makers don’t pull so much data that the flash memory chips on the cars burn out – this is literally hundreds to thousands of full over-writes.
You keep trying to focus on GPS tracking – but other car makers do not have 100% standard geolocation systems on their full fleet. Yes, it is becoming ubiquitous, particularly for newer cars, but the scale is absolutely far less.
You really need to read up on what Tesla has publicly disclosed in terms of the enormous data pulls they conduct.
I moved to Ca. In 2018 to be closer to my grown daughter.
Ca is an amazing place that is full of contradictions. On the hand there are rabid environmentalists ; on the other hand , there are highways with 8 lanes each way to accommodate Ca residents love of cars.
There are numerous houses that are built on hills in an area guaranteed to have earthquakes and mudslides .
Prop 13 is a subsidy for homeowners while the sales tax and income tax is among the highest in the country.
Ca has to nurture its millennial residents ,even though a couple needs an income of over $250,000 to afford the average house.
Ca has some of the smartest ,most productive people on earth while also having the largest number of wackos and leeches anywhere
Hence the signs in the hometown of our (and one of the world’s) arguably most prestigious university, UCB.
Keep Berkeley Weird…….or in the parlance beginning in the 60’s.
Berzerkly My met some girls who’s dorm room overlooked People’s Park. Wine bottles covered the cafeteria roof…got
Paul Newman’s phone credit card number when that was going on….many fun times there…..lived at a flop pad on Dana for a while…and….ahh, Telegraph Avenue…….yeah, wacko and leech for sure…
LA is just as nuts in it’s own way….love this place!!!!!!!
Or as we proudly referred to (and greeted) ourselves both there and on Haight St…
You are only 18-19 once! A great place and time!
What happens to Tesla is a speculation, not an investment. If you must short, keep it small so you can stick with the short for a long time. It will drop big at some point, but it could be years. Better advice is to watch and don’t get suckered in by this massively manipulated stock. It’s a playground for HFT traders and other scammers.
If a short stays for a long time, it should NOT be called “short”. I am confusing two things here but the speculative nature of putting on short position should stay speculative, AKA short term. Any long term bet on Telsla is to bet the ENTIRE car industry goes from petro fuel to Electrical and Telsla need to be at least No. 2 market share to justify its market cap being No.2 in the entire car industry.
Not really. BMW market value position is historically much higher than its market-share position. But there are other reasons. To give a few
1. American stocks are overvalued compared to European and Japanese, Tesla is American
2. Less risk. There are serious doubt if Ford, the company will exist in 20 years. Tesla, the company will exist as it is already an EV company. (Stock more uncertain)
3. No cost in closing down the ICE parts of the company. The ICE parts are the parts that car companies make inhouse
4. less debt
Totally wrong. Short stands for a short sale. It means you borrow the stock, sell it immediately and promise to repay – while paying interest in the meantime.
Short term, long term, doesn’t matter.
And within the context of what a short sale is – specifically it is a margin product. The short seller is borrowing, which means the amount of cash they put up will increase if the stock price goes up significantly.
I have no doubt that Tesla and its investors deploy the full arsenal of strategies to attack the high short sale float; Tesla’s float is over 130% of outstanding – which shows just how much institutional investment underlies Tesla’s stock price. These groups have a vested interest in seeing Tesla’s stock price go high and stay high.
Can’t wait for Elon Musk to smoke dope, stick up his middle finger at China’s government and call Chairman Xi a pedophile. Will Musk get a free pass like in US courts?
Tweet: Musk announces he has bought off the Chinese judge… funding secured!!!
Sarcastic Comment duped… see below
In Toronto, the easiest way to get a private parking pad in your front yard is to “say” you want to buy a Tesla.
This allows you to pave/cement over some existing rain absorbing grass and divert more rain water into Toronto’s sewer system.
All to save the environment!
Ya gotta love that! How typical.
Can’t wait for Elon Musk to smoke dope, stick up his middle digit at China’s government and call Chairman Xi a p?dophile. Will Musk get a free pass like in US courts?
Tweet: Musk announces he has bought off the Chinese judge… funding secured!!!
Some people like Tesla as a status symbol. The autonomous driving features are ahead of their time. There are You Tube videos of Tesla drivers asleep behind the wheel while moving in traffic. Safety is important. Our lives depend on it.
I was one who thought Amazon was not a good investment when it was negative cash flow years ago. Someone I did not know well told me to buy Facebook the year of its IPO. I did not even know what it was back then, much less buy it. Eventually I found some stock to hold onto that keeps my kitchen stocked with food and gas in my tank
I saw a white one on 101 going to coffee in Cotati. Nobody in front seats, but right rear was opaque, and it always stayed to to the far left lane.
I honestly think someone was slouched back in that corner, but who knows?
Step 3. Subprime loans to anyone in China who can fog a mirror. Loans then guaranteed by the Chinese government.
Does Musk know the Chinese government has been know to shoot and execute CEOs?
From the article it looks like Tesla is pretty much just giving it all away just to participate in China.
Regardless, if it is perceived as an American company sales growth will not be a problem, or hard to address. There’s that little problem of ‘ill will’ from Tariffs, a trade war, and name calling. Maybe in a few generations things might smooth over, but why wouldn’t the Chinese reverse engineer and produce their own, kind of like how Apple did with the Blackberry phone?
“if it is perceived as an American company sales growth will not be a problem, or hard to address”
Not sure what planet you live in but Chinese are abandonning US brands in droves. They now understand too clearly that the US can get bitter about trade and pull the rug from under their feet at any moment.
The only reason why Tesla is welcome in open arms is for “knowledge transfer”. This line is hilarious:
“Tesla’s CEO Elon Musk has proposed a very cool thing — set up a design and research center in China.”
As if it was his idea. lol It is an obligation to do business in China.
Right you are, intosh.
I don’t think they will learn much. The reverse sounds more like it the way this deal is set up.
When I first heard about Tesla I looked for some kind of scientific breakthrough. Nothing, nothing at all. Think he “discovered” a more efficient triple cell size than 18650 that everyone else uses in power tools, etc….20mm x ? , but that was much later. He runs on some kinda hype….but what?
Right now Tesla still has the best tech in the business (having had its R&D subsidized by investors for years) but it’s irrelevant because the price of batteries are still at a point where EVs can’t crack the mainstream vehicle market.
Tesla’s (or more accurately Tesla’s valuation) problem is that by the time battery packs drop enough in price such that EVs can become mainstream most of the other car makers will be on their second-generation clean-sheet EV platforms and Tesla will no longer have the technological advantage it possesses today. That day is still probably 5-7 years away but it will arrive eventually.
2025? That is the date everybody assumes. Most car companies don’t have a first generation clean-sheet EV and a generation takes 5 to 7 years
At the moment only Tesla, BMW, Nissan+ and VW(mass production started) have a clean-sheet EV. Others have an EV which design is shared with an ICE
ps. I follow the European car market so car companies that don’t sell in Europe like the Chinese and GM are not named cause i don’t know if they make EV designed as EVs
In terms of “clean-sheet EVs,” don’t forget the Chevy Bolt. A commenter here just bought one the other day. I see lots of them around, including at the charging station a block away. Chevy isn’t even pushing them. It sold about 16,000 last year.
In the US, automakers are just dabbling with EVs because they’re still losing money on them, and they don’t want their earnings to look like Tesla’s. They’re trying to get efficiencies, they’re trying to bring the costs of batteries down, they’re trying to get a feel for warranty issues with batteries, they want to make sure they can make at least a little money … before they pile into them in large numbers. They also want to know if demand is even there for that many EVs. So they’re going to move with some prudence.
The 2020 Toyota hybrids have a battery warranty of 150,000 miles, up from 100,000 earlier.
GM does not sell cars in Europe*. With cars all new tech is money losing and can only be profitable when it is mainstream. In the US management of automakers only look at the short term because they know that the market for ICE cars will be death within 15 years but that would mean lower profits now with a lower stock price and management with worthless options so better to burn the future.
*) Corvette and parallel import excluded.
Yes, got it. I just now saw your last paragraph in your comment above.
There is a youtube called “A Look Inside The Tesla Model 3, Chevy Bolt, and BMW i3” that takes all three cars completely apart and compares them side by side.
Most Toyota Hybrids (with the exception of the plug-ins) have NiMH batteries –a proven, safe technology with a long shelf life. The Teslas have lithium-ionbatteries a more power dense, but more volatile, and temperature sensitive chemistry. Toyota as usual is taking a cautious approach with lithium-ion to see if they can make it safely and reliably.
Developing these new vehicle platforms is extremely expensive so the name of the game is risk sharing. As such, Ford is joining forces with VW while Toyota is joining forces with Subaru and Mazda. The closest example to what is happening is probably aircraft engines where it has been fierce competitions who have joined together to develop many of the jet turbines which are in the air today.
Ford is not joining VW efforts. It is trying to be taken over by VW
ReGen braking is a big part of making EV work. In throttle by wire the default is a strong spring giving 15-20% “limp home” mode. But what’s the default for brake by wire gonna be? Not to mention steer, for you self driving fans.
In 10 years we might have affordable fuel cell cars (many different flavors in development, often much better environmental footprint), or affordable carbon-neutral IC (bio-)fuel. I’m glad I am not a car maker who has to think ahead for at least 5-10 years :)
Problem with bio fuels is that you could, maybe, run cars on bio fuel, or airplanes, or ships, or back-up generators. But not all. For that there is to little bio-fuel.
Pure fuel cell cars can’t compete with plugin fuel cell cars with a commuter battery (think Volt) but they have all the negatives of a fuel cell car and a battery car for society so i don’t see society supporting fuel cell going mainstream outside of maybe Japan.
Bio Fuel….. That midwest ethanol scam is trashing this country’s natural resources faster than almost any other stupid thing I can think of. Total pork, way worse than bridges to nowhere. Should be land and Oglala water banking of those food resources.
But no, everyone’s gotta have a job and some have to get richer.
WPA trails in Nat’l parks would be much better than that abomination.
I forgot Honda, they have a small clean-sheet city runner
You mean Panasonic has the best tech in the EV car business.
Hey Wolf: A little off topic…are you still comfortable being short this market? I took a small short position around the same time you did. I’m wondering if your outlook has changed – thanks
its been very hard to short during earnings season over last 4 years…..
that being said, to get to 3500, a pullback and then bounce into summer seems what the banks want…
fire and ice like current admin….
My SPY short is down something like 2.8%. My QQQ short is down a little over 3%. It doesn’t even register on my scale. My announced time frame was “several months.” We’re two weeks into it. I have no idea why people are making this hullabaloo about it here, except to have some fun at my expense, and that’s fair :-]
Because they have a short term memory problem. I remember you saying your short period was one year. 11 months to go.
Shorting these rigged, broken Ponzi markets is a good way to get your face ripped off, since Jerome “Janet” Powell has dropped all pretense of being a responsible centra banker and since September has donned his kneepads and fishnets for Wall Street with the Fed’s repo madness and “Not QE.” The Keynesian fraudsters at the Fed are going to print fiat currency and monetize debt with wild abandon to stave off the financial reckoning day for as long as they can. The best hedge against such monetary madness, IMHO, is to buy and hold physical gold and life’s essentials, since at this point a collapse is all but assured given our gargantuan debt burden and derivatives exposure.
IMO you are correct about the FED folks bending over last fall, but it certainly seems to me that it is due to the elections and not just because of the street? Also agree with your suggested end game; really seems inevitable that sooner or later a correction must occur, and also seems it always has done, eh?
Elsewhere I have read that DJT made his full court bow downs around then, to get the FED and it’s masters on his team for the POTUS election this year, succeeded, and is now a shoo in if the dems cannot drive him out with the current political manuvering; sounds fairly correct to me based on a lot of similar history both ways.
I’m interested because I wish I had the courage you have to short the market but I don’t trust this rigged market. I’ll be the first to congratulate you if your bet pays off. Heck maybe we will all get free mugs if the market tanks!
Since we are already off topic, what are your thoughts on the proposal the Fed floated recently to lend directly to hedge funds moving forward? I never understood why they are able to access the repo to begin with. Shouldn’t that be limited to banks?
“… the proposal the Fed floated recently to lend directly to hedge funds moving forward?”
I don’t think the Fed floated it. I think hedge funds floated it and got the WSJ to print it to put pressure on the Fed to do this. This is how banks, hedge funds, and others are constantly trying to get the Fed to move things their way.
During the Financial Crisis, the Fed had an alphabet soup of programs (unrelated to QE) under which it lent hedge funds and others short-term to buy stocks and other assets with to bring up prices. So it has already done this, just not through the repo market.
if I were to short in this market, I think the way to go is a far out of the money LEAP. At some point, there will be a crash, the only question is whether anyone is good enough to catch that falling knife. But I would bet there are quite a few playing that kind of strategy, whether they succeed or not, different question.
ARK Invest CEO Cathie Wood on why she believes Tesla can surge to $6,000
ARK Invest’s CEO Cathie Wood on why she believes Tesla can surge to $6,000
Short sellers borrow and then sell
Easily worth between 100 to 10,000X sales ;) TSLA is like no other.
Tesla’s are selling like hotcakes in the PNW.
Momentum growing fast.
My next car will be a Tesla.
Angry petro-industry trying to fix-it.
Reminds me of when the east coast said there wasnt a meth problem in the US only crack cocaine. guess folks should get out more.
“Selling like hotcakes” — now that the data point I’ve been looking for all year :-]
When was the last time you saw anyone selling “hot cakes”, let alone a line up for them.
The Germans were lined up for “hotcakes” at the end of last year. The hotcakes being physical gold.
Yeah. That expression must be really old, eh?
It’s really not their fault. Tesla fan-boys never talk data. Way over their heads.
“My next car will be a Tesla.”
So you don’t own one yet? You’re not a real fan. Save up already, to save Tesla.
How rare, a Tesla buyer in Seattle. Tell me more when you move Ohio or Michigan and spread those Tesla sales numbers around. Shorter lines at those charging stations too.
I guess Teslas must be selling like bags of dog poop everywhere else then, since US sales numbers are down double digits.
Tesla need to work on getting their prices down. In the UK electric cars are except from car tax, if the are <£40K base price. Tesla are £42K…stupid ….stupid….stupid
Base price? introduce a not really available Tesla 3 with a range of 100 miles and a price of £39.999
I would like to understand your short if you would please. So you are short the market with puts on the spy, and you would sell those puts at a later time? Is that correct?
Without stealing your question, I wonder what is the most effecient way to have a short position on SPY and the QQQ knowing fully well they are at record highs?
I sold short the shares of the ETF SPY. In other words, I borrowed the shares and sold them. To close out the short trade, I will have to buy the shares at market price and return them to the rightful owner. The difference between the price I sold the shares at (end of Dec) and the price I will have to pay to buy them (in the future) is my profit or loss. There is no date at which the short will expire or whatever. And it doesn’t involve puts.
Is the entity on the other side of this trade speculating or hedging?
All the subsidies that Tesla and Musk have received HERE….
were there no conditions?
He now rotates to a new nation, China, and carves new deals …
An interesting thing to know would be what the Chinese lenders and government entities will get if Tesla defaults on the term loan or on the $323 million in yearly taxes it has to pay on the factory. The factory and its equipment are listed as collateral, and will go to the state-owned lenders. But what does that include in terms of technology and rights for this factory to continue building Teslas or vehicles like Teslas once the factory has changed ownership. The Chinese government entities that funded this are pretty smart about this stuff.
I wonder if anyone has considered this as Elon’s “out”. He is essentially selling Tesla to the Chinese. The investors will lose, but perhaps not everything when the transfer is complete. Musk walks away a very rich man. There will be hardly any coverage with a Musk to China transfer because there will be no abrupt fall.
If China does eventually give it, it will be some years later- just enough time for Musk to whistle past the graveyard without being seen. Not too much different than what we saw with Sears and the asset stripping when you think about it. The asset stripping will just be less blatant and be wrapped in procedure titled “normal business operations”.
correction “give it up”
This makes complete sense.
The Chinese are always in the market for opportunities to lose more billions.
They needed to diversify out of building ghost cities and pour money into a new black hole – and Tesla is IT!
This is a brilliant move.
I am confident these loans will be defaulted on and will be followed by even bigger loans and bigger losses going forward.
Meanwhile, I, not possessing the sort of genius of a Musk, or Neumann, or the CCP, am forced to continue to grind away in my little business not ‘getting it’ and stuck in the old paradigm of fighting to stay in the black and earn a pittance compared to these fellas.
Does anyone know of a motivational speaker who can show me how to get rich by losing money? I really need some help
Curious that Tesla, unlike other auto companies, has its production facilities in the highest cost locations in both the US and China. I don’t think any other car companies build cars in California anymore and certainly not in the SF Bay Area. Shanghai too, is a relatively high cost city by Chinese standards.
Other car companies have put new plants in the Southern states or Mexico to keep wage and tax costs down. Tesla doesn’t seem to care what its costs are.
Musk likely got a very attractive deal on the former GM Nova and Toy plant there in Fremont, hired Sprung to add a ton of area under roof quickly, and is very unlikely to be paying union wages… it appears from the video that was up on the Sprung website a while back that the workers are young and very enthusiastic, so I would think they have some serious bonus opportunities, etc., as well as being fully informed as to participating in a game changing operation, etc., etc…
It’s all about losing as much money as possible. I can see that you don’t ‘get it’ either.
Join me in that self help seminar once I locate a guru.
Since when do Tesla investors care how much stuff costs?
Their only question is “how quickly can you burn my cash?”
Mainstream cars are made in cheap places. Luxury cars like Jaguar Rolls Royce, Volvo, Infinity, BMW, Audi, Mercedes etc. are more often made in expensive places. Besides assemblage is only a small part of the costs of a new car ($1k or so)
ps. I assume that Tesla got the paintshop for nearly free in their California plant. Those things are expensive.
True, except that Tesla contends the model 3 is a mainstream vehicle.
Model 3 is more in competition with a BMW 3. High end mainstream
When a company with advanced technology gets such sweet deals from the Chinese government it means one thing and one thing only: they are “sharing” their technology with local manufacturers, meaning they are effectively handing them over a big pile of patents.
Have you ever wondered why even cheap Chinese chainsaws use the Stratocharged technology to reduce emissions? Stratocharged is a patent owned by Zenoah of Japan (now part of the Husqvarna AB group), but the previous owners, Komatsu Ltd, built a factory in China back in 2004-5 to take advantage of the ultra-generous incentives offered by the Chinese government. Those incentives didn’t come free, of course: the Chinese government demanded, and obtained, that Zenoah “shared” their Stratocharged technology with “local partners”. Now these local partners are flooding the market with their cheap Stratocharged chainsaws and there’s nothing anybody can do to stop them.
I am sure Tesla has plenty of interesting technologies Chinese automakers are wont to get their hands on, and while they may not get everything they want if Tesla wants those fiscal and financial benefits they have to pay up and shut up.
Let’s just see how long before Chinese EV make a quality leap courtesy of Tesla and start eating away at their already minuscule market share: the market for affordable electric delivery vans alone is worth a fortune. But the “algos” are sure to love “Tesla”, “China” and “factory” all in the same sentence and will prop the market cap to new idiotic heights.
Let’s hope these new heights are worth turning an already fromidable market rival into a veritable steamroller: right now China’s DJI accounts for a headache-inducing 70% of the market for civilian drones, courtesy of Western companies handing their on heads to their Chinese rivals on a platter.
I have no problem with China doing this, they are a rising superpower of 1.4 billion people, their middle class is larger than the population of the entire EU. China is the future. Follow the growth.
So they just want slaves without knowledge transfer thats called intellectual property.
Sometimes the plan doesn’t work out as intended (Chinese companies are still struggling mightily with industrial diesel engines and gas turbine blades to say but two categories), but often the technology “sharing” allowed them to make a veritable quantum leap. China is the worldwide technology leader in wind turbines, mass telecom equipment, industrial abrasives, civilian drones etc.
They are not merely worldwide leaders because they have huge market shares but because their products are so good. Look at Huawei: just how many patents for telephone exchanges and the like do they file every year? And how did their Western competitors (Cisco Systems, Nokia etc) react? Precisely.
This exactly. China is not in the business of giving away money to foreign companies. Musk has made a deal with the devil. He either knows this and is arrogant enough to think it won’t happen to him, or is too stupid to care. Or c) he’s in a bind cash flow wise and couldn’t pass up cheap loans even at the expense of the long term death of his company. It has all the signs of a gambling addict doubling down with his rent money to bookies known for breaking legs.
I’m curious if you or Wolf know more about the terms of these loans. I’ve heard they’re very onerous. If Musk doesn’t generate a massive amount of tax revenue very quickly, he basically cedes the factory to the banking consortium (made of state owned banks, natch). Musk should ask Sri Lanka what Chinese bearing gifts (ie cheap loans) end up doing to you…
(PS. I actually really like Musk. he’s revolutionized space launches and EVs. It’s just so frustrating realizing that he’s the wrong type of CEO for Tesla at this stage. The only way SpaceX has succeeded is that at the appropriate transition moment, Musk ceded de facto control to his underling Gwynne Shotwell. You’ll notice he never spends nights sleeping on their factory floor… And now, they generally stay away from wild eyed wacky pronouncements and just focus relentlessly on execution and meeting their launch schedules. Musk needs to hand over control of Tesla in the same way (if he’s lucky enough to find the right person, like he did with SpaceX).
There comes a time in almost every startup where the founders leave and new management takes over. Because founders are great founders but terrible at executing once a company has grown past a certain size. Tesla is well beyond that point.
Musk is not a founder of Tesla. In fact he was sued by the founders of Tesla.
I stand corrected. According to legal proceedings and an out of court settlement, Musk was indeed a founder of Tesla.
The amount of rascality associated with Hambantota (the Sri Lanka port “taken over by China”) is something we should all be very wary of. For example why did the local government take out a 6.3% loan with Chinese creditors when the World Bank finances that kind of infrastructures below 3%? Where did the $1.1 billion in cash paid to the Sri Lanka government by China Merchant Ports for an 85% stake in Hambantota go? And finally how much disinformation has been willingly spread by India and the US on the matter? I only have an answer for the last question and it’s “a lot”.
To get back to us, I strongly suspect the Tesla leadership just flat out doesn’t care about technology “sharing”. Been there, seen that: they either underestimate the Chinese or believe to have some (most likely imaginary) ace up their sleeves. Both are fatal flaws, especially given the folks they are dealing with.
DJI started out in 2006 by manufacturing small drones for Western companies such as Parrot whose leadership seemed a bit too keen to start outsourcing design to DJI so they could cut R&D resources and increase their bonuses.
End result: in 2019 DJI had a 70% civilian market share. Western drone manufacturers have raised the proverbial white flag as DJI closest competitor, Xiaomi, is Chinese as well. All they can do is come up with are pipe dreams such parcel delivery drones. And lots of lobbying and paid-for yellow journalism.
This is not because DJI drones are cheap: it’s because they are good. They’ve learned from their former customers and became far better than them.
I thought Musk released all of Tesla’s patents for public use.
Why do I get a feeling that the Chinese have set a giant trap for old Elon Musk luring him to the land of enchantment? Or perhaps a giant web spun by the Chinese Communist Government?
Aren’t there Chinese EV makers who are competing with this “western upstart” landing in their back yard?
I keep seeing the last scene in the movie “The Fly”. “…help me….” etc.
Or, maybe the Chinese see his vision, and really do want to help him succeed against their own EVs.
I don’t know, but something doesn’t smell right here.
Personally, I believe Tesla is a fraud, and China the latest fake story about how this company will be worth zillions in the future. Every financial catastrophe seems to have some iconic fraud to go along with it. When this debt ridden everything bubble goes, my money is on Tesla as the headlining act.
if tesla’s market cap wasn’t more than gm and ford combined, and a new stunt very month or so,
ah, never mind.
Must be nice to get loans to cover factory and production! Tesla looks finished. How quickly can Tesla switch to solid state? Wheres the Pickup, Small SUV, Large SUV? Model S aging platform…
Model S may need a facelift but it could be Tesla is following Porsche. Pickup is something for the American market. Problem with vans is that they must be cheap which is why luxury brands like Audi and BMW don’t have them while it is trivial for them to buy one from an ODM like Ford, VW or Peugeot. I think Tesla can only introduce their van after their truck, which is still mostly vaporware. /is X and Y not Tesla large and medium size SUV
Blah Blah Blah. I don’t own the stock, I’m not an environmentalist, I do own too many cars that I 100% service & repair myself, and I do own a Tesla (Model 3 Dual Motor). AWSOME CAR. Period. Benefits? No antifreeze, oil, oil filter, air filter, O2 sensors, catalytic converters, exhaust systems, emission systems, alternator, fuel pump, fuel filter, 5yr lead acid battery, etc etc etc. No guages. No dummy lights. Powered in the PM. Charged in the AM. Boom – Just Go. Easy Squeezy. Never stop at a gas station again – EVER. Temporary benefits are just icing on the cake: toll lane use, purchase incentives, cheap electricity, and NO GAS TAX. It’s been drive across states and averages 80 miles per day. Problems? None. Service? None. Will never purchase another ICE vehicle – unless I replace my Italian racer (that I service myself). I’m hugely disappointed with my Mercedes GL (seat heater toasted my back, intake manifold replaced, leaking steering rack), but I haven’t met ANY Tesla owner who’s regretful. I’m long EV and long Elon. Wishing both huge success!
Owning an EV is like trying to power a country with solar energy.
Take Germany – they have tried that. And now they pay by far the most expensive electricity costs of any major country in the world.
Because, alas, people want electricity at night. And so does Porsche and BMW and all those thousands of other companies who run factories in Germany.
And (this could be the foundation for Idiocracy 2.0) apparently the German politicians did not consider this when the went full blown into ‘Energiewende’
What has happened is that they have had to build a huge number of COAL fired plants to power the country at night and when the sun is covered by clouds and wet stuff (rain) falls.
Of course the politicians did not realize that a coal plant cannot be turned on like a light switch, oh no, they were too busy reading Greta’s tweets to bother to look into that.
What you have is solar panels but in the background coal is being dumped into furnaces round the clock – then when the sun goes down the foreman screams ‘beeilen Sie sich, schalten Sie den Schalter ein’ (hurry! flick the bloody switch or Porsche will complain again)
In a nutshell, you run two power generation systems. Which (and this will also be in Idiocracy 2.0) means your costs of production double, and that’s why the Germans have such expensive electricity (ooooohhh… )
How does this relate to EVs?
Well, you have one car for the short trips (EV). And one for the long ones (ICE).
Idiocracy. No need to go to the cinemas. It’s playing out before your eyes in Germany right now.
Germany thought nuclear was the way to go, and then changed their minds.
This and Japan’s management of nuclear power are hard to believe.
It is like a (bad/sad) movie.
Solar does provide electricity at night (in Germany the sun comes up at at 04:00 in the summer) It is winter that is more of a problem. Also solar does not produce that much energy in Germany. The difference between day and night demand is still larger on a normal working day than solar production so i don’t see a coal generator being switched off because sunlight.
German consumer electricity price is high , mainly to do with the absence of local sources of energy and not so much the grune wende. Business doesn’t care about that consumer price. A company pays or retail, but than electricity costs are not important. Or some wholesale price and wind/solar energy lowers that price. Especially if you can steer your demand
Ever got into fender bender and had to have the car repaired?
Is Tesla really a tech company? Other tech companies might be interested in buying Tesla? The Chinese might want access to the tech? The patriotic thing to do would be to have a big US tech company buy Tesla. Is “populating self driving machine vision databases” a military application? The spread widens, between US strategic policy (nuclear deterrent) and adversaries (Russia) building conventional military forces until someone slips. Musk has three passports, maybe he can get the CFO of Huawei out of Canada? TSLA moves to the Shanghai exchange, and the US delists him? Tesla is really a multinational corporation? With an ADR on the NYSE?
I’m usually a Musk fan but read something I thought was really sleazy, if true. The article claimed Tesla owners are being charged for software upgrades they didn’t order or opt into, at a rate of $9-10K.
In the heavy duty world, you can buy untaxed diesel for non road use. Dyed or red diesel is cheaper. Will the increasing use of Teslas and other EV’s require two different kinds of electricity?
I know it would be hard to dye electrons, but aren’t the EV’s currently (heh,heh) exempt from road taxes?
If so, it would seem they aren’t paying their fair share?
Several EU countries are already implementing or contemplating special (road) taxes for EV’s. But I guess most EU countries will wait until there are far more EV’s and people have no alternative. Count on punishing taxes for roadside chargers too ;)
Why would they only tax EV? States love taxes and they would only need to change the excuse why the tax fuel. Old excuse:to pay for roads, but fuel tax income has always been much lower than the total state road expenditure. New excuse: CO2 sin tax. Real reason is a)money and b)lowering demand for fuel to keep the trade balance right.
That’s changing. Illinois now charges a higher annual registration fee for EVs to compensate for not paying gas taxes for the roads they use. Look for other states to start doing so as the percentage of EVs on their roads goes up.
Fwiw, I also think gas taxes should go up. The average fuel efficiency has steadily increased, so it’s reasonable to increase the portion of gas taxes that go to road construction and maintenance.
Reminds me of 1999 … Green Fridays.
Do luxury car makers, such as Lotus, have a different model than the larger car manufacturers? Would it help Tesla if it moved in that direction?
Lotus is owned by the Chinese.
The sales of Lotus are minuscule. They’re included in “other” on my table, along with Aston Martin and Ferrari. Combined they sold 2,600 units in the US in 2019. Tesla’s Model S, when it first came out, blew them all away on short order. Porsche is doing very well selling about 55,000 vehicles in the US in 2019. The Model S and X were in that ballpark, and price-wise they compete with Porsche. This could have been a route to go. But Musk decided to go downscale and mass-market. This is not easy to pull off.
TSLA isn’t a car maker, it’s a virtue signal maker / status maker. Car could be a hot piece of garbage and the cool kidz in San Jose will still but it to show they care.
Just Some Random Guy,
I heard you’re in the market for a Taycan, no? Didn’t “some people close to the matter” see you check one out at your favorite Porsche dealer?
I’d like a Taycan, not really in the market for it just yet.
Tesla used to be a thing for status symbol when it has just Model S and Model X. With Model 3, atleast in SoCal, you have Model-3 everywhere and no more a status maker.
Just my observation from San Diego!
Going to China? Why not? Where else could Tesla move to continue “I have a big potential” show?
It’s either China or Mars. China seems less dangerous and more realistic.
What bothers me more, is the concept of EV itself applied to mass transportation.
All economic equations I see make me believe that EV will beat the ICE cars only after end of oil.
Are we expecting the average Joe being outpriced from the gas stations by 2030-2040?
I heard a commentator essentially say that as the rest of the world is more urbanized than the US, and they want less local urban pollution. They will ban anything but electric vehicles in cities.
If so, Tesla may have found its honey hole.
I think the modern economy may require a bunch of regulatory help for big businesses to be successful. That may not be a healthy (economic) situation.
(Uber, Tesla, mobile phones, etc. all require significant regulatory involvement to even be in business).
About 8 months ago during poker, bet my neighbor $100 that TSLA would be under $20 by 2022. A few weeks back I offered $50 to call the bet off; refused. Now with China in the picture, the TSLA spinning top has a chance for longer spin, but the inevitable will occur at some point.
Tesla raised something like $5.8 billion last year – bringing their funding total to $19.9B.
Tesla net income from 2014-2018 was minus $5B.
How much of the $5.8B is going towards repaying previous debt, how much to build out China, how much left to continue funding negative cash flow?
That’s the equation that matters.
There’s still plenty of time for your bet to pan out.
In other news:
China’s Great Wall Motors to buy GM India’s last plant. (With the sale of this last plant, GM’s export operations from India will come to an end 3 years after GM “exited the domestic market”. In 2017, GM had sold its main factory in Halol, Gujarat, to “SAIC Motor, which owns the British brand MG Motor” &MG manufactures the hot selling SUV Hector from GM’s plant !
Great Wall’s India launch at Auto Expo 2020.
China’s biggest SUV maker, GWM will officially debut its Haval brand and “electric vehicles “at the upcoming India Auto Expo and launch its Indian market plan.
Bouyed by the success of MG Motor in India (MG Hector SUV), many Chinese automakers are looking at entering India to combat slowing sales at the home market.
it is worth noting KIA after exiting India long ago re entered India with a new SUV KIA Seltos (ICE) and got a advance booking of 100000 units. Delivering 15-20k/ month.
So chinese auto invasion in to India continues with SAIC’s MG Hector & now Great Wall with a wider portofolio of SUV’s & electric.
No new entrant is launching sedans.
1) China GDP in real terms is lower than 1997/97 HK
crisis and 2009 lows. 2) When Ilan will be in real troubles he will be force to transfer rockets science knowledge, nobody care about EV or solar panels in China with hundreds of local mfg.
3) Ilan might end up living in Beijing, escaping a waterfall collapse of Tesla stocks, a Chinese citizen.
4) As long as TSLA behave well, – keep moving up – it doesn’t matter if its
up from 300 base or 500.
5) The problems will start when TSLA will start to behave badly.
Yes, it is plausible that Telsa will be completely owned by China. When and under what circumstances are good topics for guessing as of now. I dare made the assumption that Musk must have this as plan B or C.
Businesses and companies in China operates largely under the umbrella pf the Communist party. Almost all the big guns are members of the CCP or deeply connected.
Justification of each purchase and the price can always be an important national interest and duty. Of course this is debatable but the debate comes much later amongst the cadres.
HP sold 51% stake in her China Server business to Tsinghua Holdings in 2015.
IBM sold PC group to Lenovo in 2004.
HNA bought US Ingram mico.
HNA in addition bought many other corporations in the last 8 years including a major stake in Deusche Bank.
Club Med is no more Frenchy.
And many others.
The fact there is that whatever the outcome of the purchase and the subsequent results, can never be greater than national interest.
If you are a member of the CCP you acted in national interest unless investigation proves otherwise later.
Bailing out a big corporation there is a government affair. The standing of key executives there counts.
Later perhaps should Telsa have great success there being a totally owned Chinese
company is not far-fetched.
Tesla al bout the batteries no treble.Investors are
betting Elon is the man to figure it out.
1) If Ilan move to Beijing, helping PLA to build new type of rockets,
Tesla value will be smashed by rocks, or Hammered in every corner.
2) Phase I was signed : fakes, intellectual properties stolen from US, will be
ban and confiscated.
3) Tesla is a US invention.
4) Exporting fake inexpensive Tesla cars to the US market will be ban.
Well, that was a bit misleading. Tesla makes its quarterly shipments based on distance from Fremont. Thus shipping to China, Europe, Australia first. Then Canada and the East coast. Last is California and dead last, ie the last weeks of December, is the Bay Area.
Since registrations with the DMV trail deliveries by 2-4 weeks, your claim that sales fell by almost 50% is misleading. Not exactly misleading, probably just wrong.
But will the January registrations provide the missing 13,000 vehicles? If that in fact turns out to be the case, you will have a chance to report that when January numbers come out.
Wrong. Re-read the first paragraph and try to understand what it says: These are YEAR-OVER-YEAR comparisons. The issues you describe — the delay between deliveries and DMV registrations — happen EVERY YEAR IN THE SAME MANNER. The drop was in registrations in Q4 2019 compared to Q4 2018. The delay applies to both years the same way. That’s PRECISELY WHY year-over-year comparison are used, to eliminate those kinds of month-to-month timing issues.
I get your point and it’s a good one. But there is the assumption buried in there that out-of-California sales as a percentage of total sales were the same in Q4, 2018 and 2019. I don’t know whether that is so or not, but it wouldn’t be my first guess.
My guess would be that due to a substantial y/y increase in out of state sales that California deliveries were pushed to later in the 2019 quarter than happened in 2018
I have one data point. I bought a Model 3 on Dec 18th. It was delivered to me by someone pulled out of the accounting dept, due to a shortage of delivery personnel. The DMV recorded that sale on January 7th. So maybe no California sales were recorded as Q4 after December 11th or so.
You are probably right about this because you have a much more nuanced approach to this sort of thing than I do. I guess the y/y change in January DMV registrations will tell the tale. They should fall by 50% as well if the conventional view is correct,
YOU ARE ALL WRONG ABOUT CHINA YUAN CURRENCY STRENGTH
WHY CHINA IS THE BIGGEST GLOBAL CURRENCY MANIPULATOR ?
China will forever trapped in ultra cheap Yuan policy due to their own initial greed and incompetencies, in a currency war with the US.
China started the trade war against the US in 1994, by weaponising the Yuan with the full approval and support advice from Kissinger.
In 1994, US$1 = 8.9 Yuan
In 1993, US$ 1 = 5.7 Yuan
In 1992, US$ 1 = 5.3 Yuan
In 1990, US$ 1 = 4.8 Yuan ( after Tiananmen Incident )
In 1989, US$ 1 = 3.7 Yuan ( before Tiananmen Incident )
The above shows there is a drastic devaluation from 1992 to 1994, which China weaponised the Yuan to be more exports competitive.
China cannot even compete with the South East Asia countries such as Thailand, Malaysia and Indonesia in 1993 when US$ 1 = 5.5 Yuan.
After 1994, China become the cheapest labor cost value for money in the world, and caused the Asia Financial crisis 1997-1998. This Asia Financial crisis destroyed economy of South Korea, Taiwan,Thailand, Malaysia and Indonesia.
Before 1994, most of the global supply chain are from south east asia countries, Taiwan and South Korea.
After 1994, when the Yuan is drastically devalued, most of the MNC supply chain moved to China, thus destroyed south east asia , Taiwan and South Korea economy.
……there has been considerable debate over whether China’s 1994 devaluation triggered the Asia regional crises of 1997 and concerns in the region that:
“the PRC’s entry [into the WTO] will lead to an acceleration of investment flows to the PRC and a corresponding reduction in flows to themselves.”
China claim they have the most advanced technology in the world. Then why does China continue to devalue Yuan to be competitive ?
China is the biggest global currency manipulator which was approved by Kissinger/IMF/World Bank.
China biggest mistake is to peg foolishly the Yuan at such low rate in 1994 USD1=8.9 Yuan.
China unintelligent leaders are very desperate to get FDI from American and Japanese MNC, to create jobs and earn enough foreign exchange surplus in US dollars.
This ultra cheap Yuan policy is a big mistake and has now come back to haunt the unintelligent leaders of China.