Tesla Moves Up The Scale Passing Audi
The competition is coming!
This is a statement we heard applied to Tesla for years. It was meant to convey the fact that legacy automotive were getting into electric vehicles. Once that happened, so went the thinking, the lead early advantage Tesla had would evaporate.
For the last 6 years, this was wrong. I maintain the failure to understand what competition means is the cause of this. To be a competitor, one needs to be in the same market as another. This is not the case with most companies that people refer to as "competition".
Understanding who the predator and who is the prey is vital.
In this situation, we have to frame what Tesla makes.
While most want to say automobiles, it is specifically luxury, premium vehicles. This means that an automaker such as Ford is not competition.
If you are going to name Ford, might as well throw in Home Depot or McDonalds. They do not make luxury autos either.
Tesla Is The Predator
By the end of the year, Tesla will have mopped the floor with the competition. This means that anyone in their segment is going to be crushed.
When we mentioned competition, it is coming. And the one who is doing that is Tesla.
It is the predator and the rest of the industry the prey.
Look at the chart above. When we discuss luxury, premium autos, Audi, BMW, and Mercedes are the category. Some might put Lexus or Cadillac in there. However, this sector was dominated by the European manufacturers for decades.
Now that is changing. This is global auto sales. Notice how Tesla has closed the gap quickly. Over the last couple years, the lead has diminished.
It is now to the point where Tesla surpassed Audi in global auto sales. Please note this is not EVs but total sales. For the quarter, Tesla is about 100K behind BMW and Mercedes.
So why do I say that Tesla will surpass the other two by year end?
The Berlin factory is slated to hit 10K vehicles manufactured per week. That is an annual run rate of 500K. Couple that with their other factories and it is easy to see how the numbers will flip.
That means the competition, i.e. Tesla, is bearing down on the leaders.
Two Biggest Sectors Next
What are the two biggest segments in automotive? That would be pickup trucks and medium priced sedans.
Do you know how many vehicles Tesla makes in these categories? Zero.
Over the next two years, the company is going to start manufacturing the Cybertruck and next generation EV. This is going to target the Toyota Corolla price range.
The first shot will come in the 4th quarter when the first pickup trucks roll out. Some question how many Tesla will sell. That, naturally, remains to be seen. However, this is going after the F-150 and Silverado buyers.
In other words, Tesla will be entering the stronghold of Ford and GM.
As the European automakers found it, Tesla, once going, can really put on a charge and close the gap.
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I think there will be a downtrend coming. A massive chunk of those sales come from China. If you know anything about China, they tend to take a good idea, reverse engineer it, and make a cheaper version of their own, sometimes even better functionally.
They have already done this with EV's, with cars like BYD dominating, set to surpass Tesla any day now. Further, there's a lot of political sentiment against Tesla. Nationalism will always win over, and ultimately, Tesla will phase out, pretty slowly I imagine, but after years of declining sales.
This is not just a blind prediction, but based on countless examples over the years falling for the exact same fate. But for Elon it's even more sensitive, because he has to constantly balance this idea of 'free speech' with marketing to China, which demands the exact opposite.
All it takes is a little outrage by some Chinese netizens about something some random guy said on Twitter, and suddenly Teslas are getting their windows smashed in across China and boycotted.
Never do business with China XD
I would disagree with that. To start, Tesla is the first wholely owned company in China, no Chinese partner.
Second, Elon brings something to the table that the CCP needs: jobs. Shanghai is a major export hub for Tesla and source more than 90% within the country. As they scale towards 2-3 million vehicles manufactured there along with the battery production that is going in, we are talking a ton of jobs. This is how the CCP has always offset the risk of revolution.
I do agree that the percentage of the company's production and sales in China as compared to the whole has to decrease. It is more than 50% right now. That will change with the new factories being built.
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We can look at another big example: Huawei literally just rips all the tech from Apple illegally, sells it cheaper, and then dominates the market. There's still iPhones in China sure, but barely 10% of the market share compared to 40% Huawei.
Does this look familiar?
That's right, a Huawei store lol.
And even Apple has bent the knee to the CCP. When the protests were going on during lockdown, people were sending messages through airdrop. Apple quickly updated it to put a stop to it at the request of the CCP. Only in China are you restricted from using that technology over 10 minutes.
Tesla might be fine for a while yet, but it is, ultimately, just a matter of time.
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Not everyone wants a Tesla. In my case, when I plan to change my car in the future. I will go to the Toyota Prius.
At this moment, not everyone can afford a Tesla. That will change in a few years, at least relative to the prices of other cars.
Tesla wont have 100% market share. Plus the Prius isnt an EV so you are comparing apples to oranges. A hybrid is a different option from a pure EV.
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The latest model of Toyota Prius is completely electric. You can make over 1035km with one charge.