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What the Fudsters Ignore (Auto Sales Overall)

What the Fudsters Ignore (Auto Sales Overall)

From CleanTechnica...

The following automakers saw their sales drop in March 2019 compared to March 2018:
Fiat (−45%)
Chrysler (−38%)
Alfa Romeo (−31%)
Infiniti (−23%)
Mazda (−19%)
Jeep (−11%)
Buick (−9%)
Chevrolet (−8%)
Dodge (−6%)
Toyota (−5%)
Nissan (−5%)
Mercedes (−5%)
GMC (−4%)
Ford (−2%)
Cadillac (−2%)

Those are the 15 automakers that saw sales drop across all categories/vehicle classes combined. In most cases, car sales were down even more than overall vehicle sales.

There were also 8 cases in which an overall automaker’s sales were up but its car sales were down year over year. Those carmakers were:
Subaru Cars (−22%)
Lincoln Cars (−17%)
BMW Cars (−15%)
Volvo Cars (−10%)
Hyundai Cars (−9%)
Acura Cars (−7%)
Audi Cars (−7%)
Lexus Cars (−6%)

There were only 4 automakers that saw overall growth year over year and also didn’t see a drop in car sales:
Ram (+15%)
Volkswagen (+14%)
Kia (+10%)
Honda (+4%)
_________________________________-
Meanwhile @ Tesla
Q1 2019 vs Q1 2018 - +110%
Q1 2019 vs Q4 2018 - -15%

We heard a ton about Tesla's quarter over quarter decline in sales from Q4 to Q1. Never mind that in the auto industry the 4th quarter tends to be the best for sales and the 1st Q the worst. Never mind that the tax credit for buying a Tesla was halved in Q1 from $7,500 to $3,750 guaranteeing front loading in the 4th quarter to take advantage of the full tax credit before it started to phase out. Never mind that Tesla spent most of the early part of the 1st quarter shipping M3s to Europe and China which takes longer than sticking them on a train or truck to ship to Chicago.

Hmmm... isn't that interesting? If Tesla is nearly bankwupt as the critics love to say, what do you say about all the legacy carmakers? Why don't we hear much about it? Why doesn't the market hammer those stocks? Tesla's in debt? Take a look at GM and Ford's balance sheets.

Some other things of note:
• GM has announced a 15% cut of its 54,000 North American salaried jobs, including a quarter of its global executives, and will end production at five North American plants in 2019. GM also said it would also close two other unidentified plants in 2019. Powertrain plants in Warren, MI and Baltimore don't have products assigned for them to build after next year either.
• Elsewhere, Tesla is building a massive new gigafactory in Shanghai on what is termed Chinese time meaning extremely fast. The new gigafactory is going up at a record pace. Tesla and the Chinese say the building will be up and operational and making cars by the end of 2019 at a cost of ~$500 million. Wall Street analysts scoffed at the initial announcement saying it would cost $2 billion and take 2-3 years to build. Tesla/Chinese officials have signed loan agreements to show and photos of buildings going up right now ahead of schedule. What do you have Wall Street?
• No question that Model X and Model S sales in the first quarter weren't a bright spot. Most analysts, and including some Tesla enthusiasts, have been saying the MX and MS are overdue for a refresh. It's coming. According to Electrek, the cabin interior's new design is already in the works. Yesterday, Electrek also stated that the MX/MS are to receive new, more efficient permanent magnet reluctance type motors like the M3, which are more efficient and will extend the range of both models without making any other changes.
• Revered auto teardown guru Sandy Munro was highly critical of the Model 3 when it first came out. The fit and finish didn't wow him. He has since changed his tune. Sandy has torn down a couple more M3s and you should hear him now. He has totally flipped. He LOVES how the M3 and Tesla cars in general handle. He's knocked over by how far ahead Tesla is in software. He thinks the cars are state of the art engineered. He also said that if he were 23-35 and wanted to drive fast you have to buy an electric car and Tesla makes the best ones. He also stated that Ford and GM are far behind and don't realize it. This is quite a turnaround.
• Musk just announced the most significant update to autopilot ever that is starting to roll out as I type this. I don't know what's in it, but Musk is awfully excited about it.
_______________________________

There is a recession coming and that can and will affect all things economic, but overall... Would you rather own a car made by a company that is expanding rapidly despite a disappointing quarter to quarter performance, or one that is showing a sustained decline in sales? Would you rather have a piece of a company that is opening new plants to move into new markets, or one that is closing down production capacity? Would you rather own stock in a company that takes on debt to expand, or one that takes out debt to finance stock buybacks and pay dividends? Would you rather own stock in a company that is pioneering a way to move ourselves around in an environmentally and cheaper way or one that clings to a century old technology because it fears hurting its balance sheet in the short term to reap huge rewards in the future? Short term or long term?

The answer is pretty obvious.

TeslaTap.com | April 7, 2019

Also never talked about is how other automakers commonly stuff the dealers with unsold inventory, but is counted as "sold" in the numbers. It makes it harder compare. if the unsold inventory is flat, it also means the other automaker's real sales to consumers is 30-90 days or more behind their published semi-fake sales numbers. Tesla's numbers are actual sold vehicles in customer's hands.

Tesla's Q4-18 numbers should be compared with other automakers Q1-19 numbers. We'll have to wait until the end of Q2 to see true consumer sales in Q1 - it may be far worse. Those future Q2 numbers should be compared with Tesla's Q1 numbers.

jordanrichard | April 8, 2019

The local Subaru dealer has not only a full lot of cars, but two additional off site lots full of new cars and seemingly every week or so another load arrives..

garydz | April 8, 2019

The joint agreement between Tesla and FCA to "game the system" in the EU is putting $$$ into Tesla. However I think it is a missed opportunity. Part of that deal should have been for Tesla to be able to sell thru the FCA dealer network in states that are not being free enterprise friendly.

(Or maybe and EV Wrangler? Minivan? Hmmm.)

andy.connor.e | April 8, 2019

They effectively double their production each year. And even though Q1 was 15% less than Q4, they will still easily double production this year again. Throughout all of 2018 they were ramping up production. At the end of this year they would have been ramped up already, plus adding the factory in China, which could potentially double the production numbers again for 2020. These are the facts that no one wants to bring light to. There are so many industries that want Tesla to fail. Thats why when you search Tesla in news all you see is FUD.

rxlawdude | April 8, 2019

Interesting article in today's L.A. Times. FRONT PAGE ABOVE THE FOLD
https://www.latimes.com/business/autos/la-fi-hy-tesla-short-sellers-musk...

Mike83 | April 8, 2019

I've read that the owners of the LA times has a competing company to Tesla but forgot the name. They have been anti Tesla for some time. I don't read them and deleted them as a credible source along with such rags as the wsj, bloomberg, nytimes, and other mainstream news that gets its money from fossil fuel sponsors. Not much journalism around anymore as it is mostly clickbait for entertainment. I prefer Colbert for entertainment.
Lots of quantity but no quality so not worth my time.

rxlawdude | April 8, 2019

@Mike, of note is the author of the article is Russ Mitchell, whom I've called out on these fora as a devout anti-Tesla ICEhead. (Though he loved the Bolt!)

If you check out the comments to that online article, it seems many people have the same thoughts about Russ. I've had some email exchanges with him, and he's just another Lutz.

andy.connor.e | April 8, 2019

If you're truly non-bias, it doesnt matter what company is making the EV. The fact that they are being made at all is something to report to the people.

rxlawdude | April 8, 2019

True story: When Russ Mitchell reviewed the Model S AWD, his primary complaint was it was "too expensive."

Yet at least twice a month he reviews cars costing over $200K.

SMH.

andy.connor.e | April 8, 2019

Maybe they want people to think they are too expensive, when in reality, a SR Model 3 is not any more expensive than a BMW. Tesla is not yet at the point where they can compete with economy cars like Toyota, Nissan or Kia.

andy.connor.e | April 8, 2019

Also just wanted to add, i havent seen many articles regarding the Bolt as "too expensive". #Bias

Madatgascar | April 9, 2019

The beginning of the end for Tesla. They will have no choice but to give up and declare bankruptcy. They can’t slow down their growth, won’t be able to raise more money, and will never realize economies of scale. Nobody will want the Model Y SUV. Models S and X are getting old and they have no plans to refresh them, ever. Model 3 sales clearly fell off the cliff, only amounting to 31% of the market in Europe. Sell, sell, sell!

Darthamerica | April 9, 2019

The issue is can Tesla remain profitable. Without that there will not be a happy ending. It’s really hard to survive in the auto industry. I am neutral but hopeful. I hope to see things by year’s end that make me change hopeful to confident!

andy.connor.e | April 9, 2019

I have confidence that the lessons they learned from the Model 3 will present themselves with the China factory to be finished this year. Effectively doubling their production capability. Do we know? Absolutely not, but unlike American automakers, Tesla has shown that they are capable of learning from their mistakes.

MJP.75D | April 9, 2019

Haha Haha haha @Madatgascar. Thank you — I needed a laugh. Keep ‘em coming!

carlk | April 9, 2019

Those fools only know to look at quarter to quarter sales figures but they could not see the big picture. None of them could see or care what Tesla's long term strategy is. It is to quietly, or not so quietly, working toward building the critical mass. Tesla has insurmountable lead in EV and automation technologies already. Others will not have a chance when it reaches the critical mass that will remove its only disadvantage which is its size. Again this is the strategy from the day one, Elon has told us very clearly in his "secret" master plan (btw it is working beautifully), but those fools are still in denial.

Mike83 | April 9, 2019

Wall Street wants more shares to cover the shorts but Tesla prefers to NOT dilute shareholder's stocks.
This really pisses them off but I like it.

dmm1240 | April 9, 2019

Had a long talk with my financial planner today regarding what to do about my Tesla stock.

Assumptions:
1. Tesla will not go bankwupt any time soon.
2. Tesla continues to push ahead with innovations.
3. The Shanghai gigafactory is going up for 1/4 the cost Wall Street predicted in 1/3 the time. They broke ground in January and buildings are already going up.
4. The financial benchmarks are not good. Every day we see new data presaging a global slowdown that could tip into recession by Q4.
5. Tesla sells a premium product in a highly competitive industry. When the economy goes sour, high priced items are particularly vulnerable.
6. Auto sales overall are declining. Last quarter, only 4 companies grew sales while the rest saw catastrophic to worrisome declines.
7. The only bright spot in the auto industry is EV sales overall, but even this segment might not be invulnerable to an overall downturn like you see in a recession.
8. Just like with housing in the 2000s, lenders have started handing out subprime auto loans; default rates are high and growing (dejá vu all over again).
9. Equities markets, particularly stocks are losing steam. Much of the rally in the first quarter was fueled by corporations doing stock buybacks. Institutions and individual investors are selling out and going to bonds, however.

That said, here's the conclusion we came to:
1. Tesla stock could take a hit soon, probably after Q1 financial results are announced.
2. The stock market overall will run entirely out of steam by May/June.
3. Tesla is probably not a good hold in the short term; for the long term it is probably excellent.

But what if Tesla can't survive the recession if it's particularly severe? Good question and I don't have an answer.

I decided to hold knowing it could likely be 2-3 years before the gains everyone was thinking would happen actually do happen.

Let's just hope the downturn - if and/or when it comes - is not a 1929 style disaster but a more normal recession.

What I'm going to do -- stop looking at my brokerage account balance for a while and let the chips fall.

carlk | April 9, 2019

Tesla will survive anything. It does not need everyone to buy in. It does not need even 10% of people to buy in, It only need 1% of people who believe the company to buy in. Don't tell me we don't have even one percent of investors who are smart enough to see what the company is. And then Elon has the will of do anything to not fail.

kcheng | April 9, 2019

Some good food for thought. I wouldn't worry about the analysts and TV pundits too much. The truth will come out over time, whether Tesla will survive. What the analysts say won't make a whit of difference.

As for the Gigafactory 3, I think the current footprint is about ¼ of the final footprint, so if $500M for Phase 1 is only ¼ of the estimated cost of $2B, then is it all that wrong? If you look at that one rendering of Gigafactory 3 that has been shown, and look at the footprint of the site, you'll see that they have it pretty much filling the whole site, because there's a distinctive shape down at the southern end that's visible on the rendering and on a map. Then when you watch the videos, you can see the landmarks and figure the construction site with footings are less than ¼ of what's been planned.

As for all the macroeconomic stuff, I think you're being a little too pessimistic. Much of the drag has been the effect of the tradewar which affects the two largest economies in the World. High auto loan interest rates have been a drag on car sales. I saw it reported last week the average car loan was approaching 6%! Obviously, not credit union rates or captive finance rates. Auto loan defaults aren't as bad as the housing crisis. Cars are far easier to repossess than housing. Also gas prices are supposed to rise, so that should help drive EV sales.

Yodrak. | April 10, 2019

"Had a long talk with my financial planner today ..."

Thanks for sharing the highlights..

andy.connor.e | April 10, 2019

@carlk

Theres a reason why Teslas investors have stuck with them since he went public. If it was truly everything that people at seeking a$$pha say, why would they stay invested for 10 years.

TeslaTap.com | April 10, 2019

WSJ today in editorial (not really positive on Tesla), but claims every other automaker loses an average of $12K per EV sold and can't really compete with Tesla. Automakers are only going to continue to make compliance vehicles in the minimum volume necessary to allow continued sale of high-pollution ICE vehicles.

What seems totally loss on WSJ and most automakers is how much better an EV car is to drive, maintain and the range of features available in an EV that don't exist in any ICE car. You'd think Tesla having 97% owner satisfaction would capture automaker's attention. Maybe in 2025?

andy.connor.e | April 10, 2019

Big car companies take the losses on the EV because there is a requirement that they have an EV program. So the cost of business, that is, the cost to maintain the ICE production as it currently stands, is to take a negative margin loss on the very few EVs that they actually do sell.

And the fact that all these companies are taking losses on their EVs, should be a red flag to everyone betting against Tesla. Tesla pulled off 2 quarters of positive cash flow, while all the other companies take losses on every vehicle. The laughable bias.

andy.connor.e | April 10, 2019

Another reason why they dont promote their EVs. They take losses on them. Why would you encourage someone to buy a product you dont make money off of.

Mike83 | April 10, 2019

Well said TT.

El Mirio | April 22, 2019
Shock | April 22, 2019

If we're going to say that Tesla is to be held to the same standards as other car companies we should value its stock accordingly, which would have it a sub $100 stock. You don't get pie-in-sky valuations and then pretend when things go south for it, it's now just another car company so it's all okay.

Mike83 | April 22, 2019

FUD is too funny.

dmm1240 | April 23, 2019

The way analysts move the goalposts around for Tesla is amazing.

As stated above in my OP, sales did decline 15% from 2018Q4 to 2018Q4. Isn't that normal for the auto industry as a whole? You go back and look through the years, Tesla sales patterns follow the overall industry's, generally speaking. March, September and December are the best months. January/February are the worst. That's true for every carmaker. So what? Well, Tesla isn't allowed to have a typical auto industry annual sales cycle is what.

Car lovers left Tesla's investor day on Monday wowed at the potential of autopilot. Traditional analysts left confused and yawning.

The current FUD is:
1. Model 3 demand has fallen off a cliff.
2. Tesla is once again cash poor after paying off a near $1 billion note in February.

Is M3 demand really tanking? You look at Bloomberg's site, around 6k M3s roll off the line every week. Production figures are now steadily increasing. New registrations for M3s are clustered in Europe. Then, if you look at the top of the registration chart, notice that there have of late been plenty of registrations for new M3s, all recent. What does that say? It says Tesla did indeed concentrate on getting M3s out to China and Europe in Jan/Feb. It says that ships take a while to cross an ocean. It says that exporting a product to another country inevitably catches the attention of customers inspectors and that some snafus are likely. Fine. But is that really falling demand? I don't know how someone could read it that way. You want to see a decline? Look at the other car manufacturers. Plus, every sign points to a world economy that is drastically slowing. Just about every stat coming out of late is worrisome. Car sales, particularly for expensive models, are more vulnerable to economic downturns than shampoo or other goodies.

Yesterday, Tesla held a day for investors (read pension funds). Admitted Tesla enthusiast and "analyst" Galileo posted a video last night where he looked to be on the verge of a heart attack he was so happy; claimed he intended to go out the next day and buy more Tesla stock. The traditional Armani suit crowd left the same gathering less than impressed. They went back to their keyboards and found every dark cloud they could possibly think up. The only problem is they aren't all that bright, but the cable business channels are eating it up with a spoon.

It's quite interesting to watch this unfold.

Tesla-David | April 23, 2019

Thanks @dmm1240 for excellent analysis. The FUD articles are so perverse now it makes me sick, and I tend to ignore them and only focus on the more positive ones. I continue to believe strongly in Tesla and their incredible products.

Tesla-David | April 24, 2019

@NOLEK SUM you are the moron, Tesla hating troll flagged

mcdonalk | April 24, 2019

re: "Autonomy Day"

At about one minute into the first presentation, I realized that most of the audience (presumably of analysts) would have no understanding or appreciation of what was being presented.

I spent my career as an electronic engineer, so I was able to follow the chip design presentation and was able to appreciate its significance and the achievement of its architecture and development.

Similarly, my wife has a computer science degree and particularly enjoyed the presentation on the neural network. We both appreciated Musk's honesty throughout the presentation.

I unfortunately predicted the tone of most of the reporting on the event, since the content, and apparently the implications, was unfortunately beyond the ken of most of the audience. (Shouldn't analysts covering technology have a technological background?) However, I am wondering about two things:

1) Must said that over the next months, we would be hearing much more about what was presented. Is Tesla about to embark on a PR campaign?

2) Other than some comments on Hyper Change, I have not been able to find any reporting on the test ride event that followed the presentations. Were reporters forced to sign an NDA? Or, was there no reporting because the content of the presentation was not understood? Or, other?

Personally, I am wondering whether the overall presentation was an historic event.