WUHAN,CHINA - AUGUST 5: (CHINA OUT) Visitors look at a Tesla model during the 5th China International Industrial Design Expo in Wuhan International Expo Center on August 5,2022 in Wuhan, Hubei Province, China. The Expo held covers an area of 30000 square meters and 331 exhibitors. (Photo by Getty Images)
No. It’s not because of the EV giant’s etymological proximity to Telstra. I’m afraid if that’s the connection (something the Aussie telco does incredibly little of) you’ve been thinking of, then take one step back.
What follows is for the rest of you.
The company founded and foisted upon us all by Elon Musk, CEO of so very, very much this year has had a fabulously rotten 2023.
There’s admittedly not been a lot of it. But what we’ve seen so far looks bad for a company named after a guy who died in relative obscurity and financial ruin.
And it’s not going to turn around just because Elon deems it must.
Possibly to boost demand, possibly out of self-loathing. It’s 50/50 for me, to be honest.
Musk’s contrarian approach to whipping up the expectations of analysts and fanboys left Wall Street in a fit of despair when China production numbers fell to 55,800 in December from more than 100,000 in November. They’re actually quite bad, even if you hadn’t been promising the world.
Tesla’s global deliveries of 405,000 vehicles in the fourth quarter was another record, but that doesn’t mean nuthin’ when you mess with the expectations of the people who actually move the money around.
At barely over 330,000 yuan, (USD $32,000) The very Concorde of the EV world, the Tesla 3 is now a full-third cheaper to get in China than it is in the states.
Compared to Australian prices, Tesla is practically donating it.
But that’s far from all Musk’s Tesla is giving away.
In China, where brand and ‘face’ are intimately entwined, the moment you start de-luxifying your quality is the instant onlookers wince in uncomfy embaressment.
Under Xi Jinping, the aspirant Chinese middle class has been given a million reasons to buy local, and the public humiliation of a fire sale one of the worlds most coveted status symbols is unignorable.
If commercial nationalism with a big stick wasn’t enough to convince the rich (who’ve got so much to lose in Xi’s China) to wipe the scent of Musk from their lives, then a first-person concession your stuff is actually not worthy will work every time.
And yes, China demand is so much a part of the bigger problems for Tesla.
Demand is down all over the place except possibly Sydney, but with a global recession all over the face of January, and with Model 3’s and the sort looking a long way from an easy buy for put upon global middle classes, there is no silver bullet.
For now the EV groundbreaker is so far ahead that it’s reign as global in the electric vehicle leader is assured.
But my goodness, the pack are accelerating just as Tesla is idling.
Ford, Volkswagen… or how about BMW – hells bells why not Sony – or Stellantis?
All of these companies have new rather electric looking EVs all about to land on planet earth.
Even in Sydney…
In many other pro-Elon markets, the opposite can also apply.
As Stockhead’s coolest head and Lady of Lithium, Emma Davies observed this week, our own total lack of EV market options have meant Australians have been sluggish in our uptake of EVs, while the devoted have accepted Tesla’s obstinately high prices, with only a handful available about the place for sub A$50,000.
“It now looks like more than a dozen new EV models — more than a few breaking in under the $50k threshold — are landing in Oz this year… these include EVs from China’s largest carmaker and a major battery manufacturer BYD and British manufacturer MG (which is now the brand used by Chinese state-owned SAIC Motors, the team that brought us short-lived, slightly asbestos-laden hits like the Great Wall and Cheery.).
“This’ll provide some very healthy competition to the Tesla-dominant Aussie market,” Em said, “with just 2 Tesla cars – the Model 3 and Model Y (circa A$75,000) making up 1 of every 2 EVs being sold around the country.”
A Musk Model 3?
After a self-inflicted shot foot or three in ’22, it’s suddenly clearer to me why a major force with the force majeure of Elon Musk doesn’t put his name all over the many companies he runs.
At Tesla, the share price is down well over 60% from this time last year. Ahead of Xmas his legion of followers and investors had reason to hope of a fresh start to another brave new year.
A little less profligate, a little more effort. Anything to suck on to ease the raw taste of disappointment from a year where the name Musk became irreparably tarnished.
It’s not about tossing away US$200 bn of his own money during a cost-of-living crisis. No one expects him to act within the bounds of social decency or anything.
It’s more about letting the team down when they need him most. Most Tesla stakeholders, like Cathie Wood, buy into the same universe. They’d all have some Doge poo in their wallets somewhere.
Apart from big fish like Cathie, the Tesla backers are in a state of dismay early in 2023, not just because their market lead is being erased, but because – and here’s the problem – after a nightmare performance on the Nasdaq, the Tesla stock is still ludicrously expensive.
For the growth stock of growth stocks when you’re trading at around 20 times forward earnings and the company you’ve been laughing into obselescence (that’ll be you guys, Ford) is inching it’s way back into the future AND the stock is a total bargain at barely 8 times forward earnings, then you have so much further to fall. Even BMW are worth snapping up, at just 7 x.
If Musk does not get his butt back into the saddle over at Tesla, those kept promises of the last decade are going to hurt him all the more. Other companies have investors, Musk has built his businesses on believers. And it doesn’t take much at all these days to shatter the illusion.
A well-placed tweet usually does it.
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