And another county heard from. Just to prove I do my own modeling and I have better things to do on Saturday nights, I was unaware of insideevs.com’s release of its estimates of Tesla’s fourth quarter sales when I published my Forbes column yesterday. Obviously that implies that insideevs’ data is not one of the sources feeding my Tesla demand model, but I do read their articles and have found their estimates and commentary to be insightful.
So, after receiving the usual stream of comments following my column from the pro-Tesla contingent yesterday—and watching the continued parabolic move of Tesla shares this morning— I was amazed to find that insideevs’ figures not only confirm my thesis that Tesla sales declined in the U.S. in the fourth quarter, but actually amplify that view.
Full details are here, but the highlights of insideevs’ estimates for Tesla’s 4Q sales in the U.S. are:
Model 3: 47,275 -23.3% year-on year
Total TSLA: 56,525 -27.1%
Full year 2019
Model 3: 158,925 +13.7%
Total TSLA: 192,250 +0.3%
Wow! Those estimates are much more draconian than mine, and here is where the real world—I followed auto stocks as sell-side analyst for 11 years—and the Tesla world clash. In the real world, modeling any economic factor is based on percentage changes from the actual figures recorded in the year prior. So, if Tesla did not produce growth in the U.S. in 2019, that lowers the base for 2020 sales estimates. For the first six months of 2019 all Tesla models sold in the U.S. were eligible for a $3,750 federal tax credit. For the final six months of 2019 that figure declined to $1,875. As of January 1st, 2020, it is now $0.
So, the key takeaways are:
—Model 3 sales have cannibalized those of S and X. So, based on insideev’s figures, a solid year for the Model 3 in the U.S. in 2019 (+13.7%) became a mediocre year for Tesla as a whole (+0.3%.) I believe this cannibalization effect will occur in Europe and China, as well.
Also if one took insideevs’ figure for total Tesla sales in the U.S. in 2019 and compared them to reported sales figures from BMW (+4.4% in the U.S. for 2019,) Mercedes (+1.0%) and Audi (0.4%) it would imply that Tesla lost market share in the U.S. luxury vehicle market in 2019.
—The electric car revolution is not underway in the USA. If one took insideevs numbers for Tesla plus publicly-reported data from Nissan and GM, the “Big 5” U.S electric vehicle models (Model 3, Model S, Model X, Bolt/Volt and Leaf) combined to produce a 31% decline in sales in the fourth quarter.
In addition to the Tesla tax credit changes, GM models (Bolt and the now discontinued Volt) saw their tax credit have to $3,750 on April 1, 2019 and again to $1,875 on October 1st. As of March 1, 2020, those vehicles will no longer be eligible for any federal tax credit.
So, sales of BEVs are replacing sales of other BEVs and sales of BEVs would seem to be very sensitive to federal tax credits. True Teslaphiles will argue those points all day (my email inbox is full of such comments) but I believe both truths are self-evident from the sales data.
Tesla’s poor performance in the U.S in the fourth quarter gives me more confidence in my projected range for global unit sales of 360,000 – 400,000 in 2020. That projection is the same one made by Elon Musk for Tesla 2019 unit sales on January 30th, 2019. That estimate was ultimately proven to be accurate, as Tesla announced global deliveries of 367,200 for 2019 two weeks ago.
So, I am sticking to my estimates. What would be interesting, as former auto analyst, would be if my brothers and sisters in arms would follow with some well-crafted, multiply-tested models for Tesla sales figures, which, of course, are the basis for any automotive company’s earnings models.
Instead, I am on a daily basis confronted with an array of “dumbassery” only rivaled by the fawning on dotcom stocks in 1999 and early-2000. I would note that Adam Jonas of Morgan Stanley—who was a junior analyst in London while I was a senior analyst for DLJ and UBS there—is an exception, but today’s CNBC article containing analyst blurbs on TSLA stock was profoundly disappointing to me.
These people aren’t even doing the most basic analysis—counting cars—and that has led to the enormous inefficiency of and volatility in Tesla’s stock price. I will reserve comments on some of the individual analyst quotes and outlandish quasi-futurism that is being presented as investment research, but I have followed car stocks in some way, shape or form for 27 years and I have never seen anything like the valuation or attention afforded to Tesla, both in the good and bad times.
It’s the Wild West out there, so be careful. Instead of a pistol, arm yourselves with spreadsheets, and you’ll see why a discounted calculation of Tesla’s future earnings (my model goes out to 2030) can’t possibly justify a $100 billion valuation, let alone a $50 billion one.
Otherwise, enjoy the show.