First, a few numbers:
2019 U.S. Sales vs. 2018 U.S. Sales (Passenger Cars Only)
Jan thru May
Acura Cars -2,325 -12%
Audi Cars -69,579 -79%
BMW Cars -12,034 -15%
Honda Cras -6,329 -2%
Hyundai Cars -18,614 -12%
Infiniti Cars -6,932 -30%
Kia Cars -6,613 -6%
Lexus Cars -1,938 -6%
Mercedes Cars -4,116 -6%
Nissan Cars -15,694 -6%
Subaru Cars -12,503 -20%
Toyota Cars -33,591 -9%
Volkswagen Cars 2,362 +3%
Volvo Cars -1,114 -11%
Source: US Auto Sales Down for Audi, Honda, Infiniti, Mercedes, Nissan, & Toyota in 2019
Clean Technical's, by Zachary Shahan
Ford and GM are excluded, but they're both bailing on traditional passenger cars already. As Zach points out, some are changing brands to go electric with Tesla and some are switching to crossovers and SUVs. The end result is ICE cars are getting hammered.
What is the short thesis for this spring/summer?
1. Demand for Tesla cars is falling off a cliff
2. Tesla is in deep doo doo financially with bankwuptcy imminent
#1 Not True
Tesla delivered 33,350 vehicles Jan-May of 2018: 18,305 Model 3s, 8,070 Model Ss, 6,975 Model Xs). To be consistent, we need to subtract the Model X because it is a SUV. That brings the tally to 26,375.
In 2019, thru May Tesla delivered 58,175 vehicles: 46,425 Model 3s, 5,475 Model Ss, and 6,275 Model Xs. Subtract the 6,275 MX and you get 51,900 cars delivered.
Again, US only, Tesla's deliveries for 2019 are:
Up 74.4% YTD over 2018 including the M3, MS, MX
Up 96.8% YTD over 2018 excluding the MX
Compare that to the miserable sales figures for legacy ICE manufacturers.
#2 Imminent Bankwuptcy
Laughable. Tesla has long operated with a 25%+ gross profit margin per vehicle on the MS and MX. Gross profit margin per Model 3 in the 1st quarter of 2019 was ~20%. Gross margins for the MS and MX were also down somewhat. As Market Realist put it: Unlike in the fourth quarter of 2018, Tesla’s gross margins from the Model S and X contracted in the first quarter of 2019. Price cuts in the Models S and X along with lower deliveries affected the gross margins of these models in the quarter. In the first quarter, Tesla’s Model 3 gross margin contracted to ~20%. During Tesla’s first-quarter earnings conference call, its CFO, Zachary Kirkhorn, blamed recent Model 3 pricing adjustments and high demand for lower-priced Model 3 variants for the contraction in the Model 3’s gross margin.
The problem was logistics. Tesla made a lot of cars. It shipped a lot of cars. Where the company fell short was getting those cars in the hands of customers so they could be counted as sales. Those cars stuck on docks in Dutch and Chinese ports are going to show up in the tallies announced within two weeks.
Every time an executive leaves Tesla the car press and shorts declare a disaster. Every time Tesla reorganizes some facet of its business — a common occurrence with fast growing startups — it's the end of the world. Every Elon tweet is a catastrophe.
It's all a bunch of noise propagated by a couple of industries who rightly feel threatened by Tesla. Tesla is beating them up and taking their lunch money right now and will continue to do so. The "Tesla killers" they're introducing are turning out to be pale imitations. Legacy car dealers are resisting selling the EV offerings they do have. It's GM and others that are closing production plants, not Tesla.
There are some legitimate criticisms to level at Tesla: 1) Constant price changes are ticking off current and prospective owners; 2) Tesla's idea to improve service by going digital reducing human interaction between the company and its customers is wrongheaded; and 3) You don't sell someone something for several thousand dollars (i.e. Enhanced Autopilot) and then take it away a couple of years later just because it interferes with what you're doing now versus then; 4) You don't fire people left and right every few months for this or that reason because it's convenient at the moment, one of Tesla's biggest advantages has been the esprit de corps of its workers and this being eroded.
All that said, in short, don't believe the shorts. They're pretending to hold a royal flush when all they have is a pair of deuces. They can depress the stock price from time to time, but it's temporary at best.