The Great Stellantis Flop at CES

[Deckard Cain]

Do you want to know what happens when the consumer finds out they bought an overpriced product that has been discounted extensively less than 60 days after they purchased it? Look no further than Tesla, whose insuranced registrations in China the first week have utterly collapsed in January because they abused the Chinese consumer - Tesla owners in China protest against surprise price cuts they missed

I'm sure I will be told that they will cut shifts before they cut prices - sure, ok. But you've now created an artificial price floor that will REALLY limit your pool of buyers. The only scenario then that restores volume/shifts at the plants is the economy reflating. Meanwhile, they're burning the cash they have on foolish EV products that no one will buy in a contracting macro-economic environment. So that's where we're at now.

Insuranced registrations of Tesla in China had dropped significantly because they actually have insane competition in China. The quality of chinese EVs in many aspects is superior to Tesla, if you exclude the battery technology.
Even the LFP batteries are better in some parameters than Tesla batteries. Namely, they're cheaper and can be charged to 100% regularly. The Model 3 RWD even changed to a LFP battery because of this.
BYD sells more electrified vehicles than Tesla, and NIO and Xpeng have some amazing vehicles as well.

Even Mercedes had to price cut the EQE in China, since it got a negative reception in China due to the high price and not being superior in any way to EVs from domestic manufacturers (!). That was the perception from the chinese auto press and consumers.
So no, they're not at a point where they're burning cash. Tesla has insane profit margins, something that naysayers said wouldn't be possible. They were production constrained for a long time. They'll have to compete now since the competition is catching up to them.
This is their answer. It's surely going to affect their stock price and decrease their profit margins but it's great news for the consumers.

A good old price war between manufacturers is just what's need to bring prices down. This move by Tesla in many EU countries, together with the ultra-aggressive price of the MG 4 and BYD Atto 3 is probably leading to a lot of panic in the board rooms of Stellantis, VW, BMW, Mercedes, and Renault-Nissan. And the Car of the Year Award for the Jeep Avenger just arrives as a whimper when by just 10% more you can get a vastly superior Model 3.

In the US this will spur demand for Tesla. The entire Model 3 range now can receive the $7500 federal incentive, plus different state incentives. You will be able to buy a Model 3 for approximately $35,000-$37,500. With most americans living in the suburbs and having a place to charge their car, this price effectively places the Model 3 as a direct competitor of the Camry and Accord.
This move will single-handedly force dealers to stop with insane mark-ups and will force the used car market back to sane valuations.

 

[cygnus]

"So no, they're not at a point where they're burning cash. Tesla has insane profit margins, something that naysayers said wouldn't be possible."

Only when they produce a vehicle in China and sell it in Europe - which happened for two years (2020-2022). The Berlin factory was a stupid investment, but probably a necessary hedge if Europe gets serious about slapping tariffs on China EV exports to Europe.

Chinese demand for Shanghai produced Teslas has collapsed. Telsa's US margins are decent (especially in 2022, but that era is over), but nothing to write home about. Hence, the rumored Tesla Mexico factory. Tesla Fremont will be closed by 2025.

By 2025, Tesla will be producing 3/Y in Mexico, and Y/Truck in Texas. Tesla Europe margins are unremarkable.

 

[cygnus]

"In the US this will spur demand for Tesla. The entire Model 3 range now can receive the $7500 federal incentive, plus different state incentives."

I don't see a lot of demand for Tesla outside of US coastal cities. And those coastal cities are tapped out - everyone who wanted one in the last four or five years already has one.

At the end of the day, Tesla's are upper middle class cars in the US. And the income limit for Federal EV incentive is $150K / individual or $300K / household. If you're making under that in the US, you're not going to blow $50K on a Tesla right now. The upper middle class are conserving their cash and maybe taking a vacation with their family this year.

 

[cygnus]

BTW - the M3 Standard Range (cheapest Tesla vehicle) will not qualify for the Federal EV incentive, post March 2023. It's a Chinese sourced LFP battery. If you're going to buy a M3, do it now - there's a grandfathered period between now and March when you can still buy a M3 SR and get the $7500 before the IRS/Treasury clarify the battery sourcing requirements in 2023.

All the usual Tesla blogs and Tesla fans are already aware of this, I doubt the normies are, and it's not like Tesla will advertise this loophole. Will be interesting to see the M3 / MY sales split for 2023 Q1.

 

[ChargerFan1]

I passed 5-6 large dodge dealerships on a roadtrip yesterday, all of them were packed to the gills with Ram trucks and grand cherokees, some up on the ramps out front with the "thousands off" stickers on the sides. Just checked the most packed one's online inventory. 440 rams in stock and 150 jeeps. Anyone saying there is any shortage, of anything, is lying. Spend your money elsewhere if you still hear that, some lesser models may have taken a back seat for chips but not when one dealer has damn near 500 trucks in stock, safe to say they have filled the coffers.