Thursday, March 28, 2024

"Tesla deliveries face hit from China slowdown, soft demand" (TSLA)

We saw in Monday's "Goldman Hints That Tesla May Have Some Negative FCF Quarters Ahead (TSLA)": 

....Tesla is between growth waves; new products a key consideration: According to the comments from its last earnings call, Tesla is currently between two growth waves, and expects notably lower growth in 2024....

But it appears management is more focused on being one of the 10 survivors in the auto manufacturing business than on going all out to goose 2024 sales.

One example is yesterday's announcement with the world's largest battery maker (via MarketWatch):

Tesla joins forces with Chinese battery maker CATL, and it’s a ‘game changer’ for this analyst 
The news comes as Wall Street continues to dial down expectations for Tesla’s first-quarter sales

Tesla Inc. is joining forces with Chinese EV battery maker CATL, which would be a “game changer” for the U.S.-based EV maker as it works to launch a vehicle costing about $25,000 and suffers through another volley of lowered expectations for its quarterly sales.

“The U.S. is an under-penetrated EV market in need of high quality, cheap battery tech. China is a highly penetrated EV market with an oversupply of batteries,” Adam Jonas at Morgan Stanley said in a note Wednesday.

“The [U.S. Environmental Protection Agency] has ambitious EV goals but must consider national security issues. Tesla-CATL could be a game changer.”....


Tesla has been relentless about driving down costs, which gives the company the ability to lower prices for their customers. And at the moment costs and prices are the driving forces in the EV industry and to date we've only heard Elon and Stellantis talking about this reality. 

And the headline story from Reuters via Yahoo Finance, March 28:

Tesla is expected to report sluggish first-quarter deliveries next week as the boost from its price cuts wanes and the U.S. automaker grapples with strong competition for buyers in a slowing electric-vehicle market.

After years of rapid sales growth that helped turn it into the world's most valuable automaker, Tesla is bracing for a slowdown in 2024.

The company has been slow to refresh its aging models at a time high interest rates have sapped consumer appetite for big-ticket items and rivals in China, the world's largest auto market, are rolling out cheap models.

"Tesla may be witnessing price-cut fatigue with consumers and may be testing profitability levels that the company may not find acceptable," Morgan Stanley analyst Adam Jonas said in a report to clients earlier this month.

"Such conditions may not significantly improve near-term given the age of Tesla's product line-up."

The dour expectations have sent Tesla's shares down nearly 28% so far this year, making them the worst performer in the S&P 500 index.

Tesla is expected to deliver 458,500 vehicles in the quarter to March 31, according to 17 analysts polled by Visible Alpha....


Yesterday BYD reported some very good numbers but missed expectations, guided lower and the stock was down 7.4% at one point, SCMP via MSN, March 27:

BYD’s annual earnings surge 81% to all-time high on record EV deliveries, warns of weak consumer demand and global headwinds