{"id":160915,"date":"2021-03-10T10:11:09","date_gmt":"2021-03-10T15:11:09","guid":{"rendered":"https:\/\/www.thedetroitbureau.com\/?p=160915"},"modified":"2021-03-10T16:34:17","modified_gmt":"2021-03-10T21:34:17","slug":"tesla-taking-hits-from-consumers-and-investors-alike","status":"publish","type":"post","link":"https:\/\/thedetroitbureau.com\/2021\/03\/tesla-taking-hits-from-consumers-and-investors-alike\/","title":{"rendered":"Tesla Taking Hits from Consumers and Investors Alike"},"content":{"rendered":"
\"\"<\/a>
Tesla CEO Elon Musk remains confident in the company’s products plans, predicting substantial growth in China in the years ahead.<\/figcaption><\/figure>\n

Tesla got a modest reprieve Tuesday, its shares rebounding after a month of heavy hammer blows from investors who drove the stock down by as much as a third.<\/p>\n

Industry analysts point to a variety of reasons for the EV automaker\u2019s sharp downturn, but one particular concern clearly stands out. After overwhelmingly dominating the global battery-car market in recent years, Tesla suddenly is losing ground as it faces new competition from products like the Ford Mustang Mach-E and Volkswagen ID.4.<\/p>\n

Tesla has a history of wild swings, its stock price tumbling by nearly two-thirds last February but then surging to an all-time high of $900.40 earlier this year. It dipped to barely $546 at one point this week. But there are other numbers investors may be focusing on, and when it comes to market share, the likelihood is that there\u2019s only one way to go: down.<\/p>\n

No way to go but down?<\/h3>\n
\"2021<\/a>
Tesla’s EV market share dropped from 81% to 69% due to sales of the 2021 Mustang Mach-E.<\/figcaption><\/figure>\n

In the U.S., Tesla held an overwhelming 81% share of the battery-electric vehicle, or BEV, market last year. That fell to 69% in February, noted Adam Jonas, the widely followed Morgan Stanley auto analyst, in a report to investors. Ford\u2019s new Mustang Mach-E, he said, \u201caccounted for nearly 100% of the [Tesla] share loss.\u201d<\/p>\n

That might be written off as a fluke. The electric Ford SUV is the new kid on the block<\/strong><\/span><\/a> and gained a lot of attention after winning kudos as North American Utility Vehicle of the Year in January. But the U.S. isn\u2019t the only market where Tesla faces challenges.<\/p>\n

Tesla lost share in Europe last year, the downward trend continuing in 2021, noted analyst Matthias Schmidt, the publisher of the European Electric Car Report. For all of 2019, the California brand held 31% of the region\u2019s EV market, a number that plunged to just 13% a year later.<\/p>\n

An embarrassing setback<\/h3>\n

In a particularly embarrassing setback, Tesla ceded leadership of the German EV market to Volkswagen. VW has laid out aggressive plans to challenge its upstart rival, with investments in electric vehicles set to reach $86 billion by mid-decade. The rollout began last year with the launch of the ID.4, VW\u2019s first long-range BEV. But that hatchback has had some software problems and the automaker recently told dealers to put a temporary hold on sales.<\/p>\n

\"VW<\/a>
Volkswagen has designated $86 billion to bring more than 50 EVs to market in the next few years, including the ID.4.<\/figcaption><\/figure>\n

So, the model that knocked Tesla off its king-of-the-hill perch in Germany is VW\u2019s pint-sized \u2014 and low-range \u2014 e-Up. Through February, Germans bought 3,661 e-Ups compared to just 2,371 Tesla Model 3 sedans.<\/p>\n

The pattern repeats in other key European national markets, notably Norway, where BEVs now account for as much as three-quarters of total vehicle sales, depending upon the month. Tesla is an also-ran in that Scandinavian EV hotspot.<\/p>\n

China: big opportunities but big risks<\/h3>\n

But what may be most worrisome for Tesla \u2014 and its investors \u2014 is what\u2019s happening in China, the world\u2019s largest market for BEVs.<\/p>\n

The automaker has high hopes there considering the Beijing government\u2019s New Energy Vehicle mandates calls for 20%<\/strong><\/span><\/a> of all new vehicles to use plug-in hybrid or pure battery power by 2025. In a significant move, Tesla opened its second assembly plant in Shanghai to feed that growing demand. But it is facing rapidly increasing competition from a wave of global competitors, including Volkswagen and General Motors, as well as home-grown brands like BYD, Nio and Great Wall.<\/p>\n

Tesla captured 11.6% of China\u2019s NEV market last year, CEO Elon Musk declaring \u201cWe must be doing something right,\u201d during a Jan. 27, 2021 earnings call. And the automaker forecasts a 50% annual growth rate \u201cover a multiyear horizon.\u201d<\/p>\n

\"\"<\/a>
Tesla forecasts it will enjoy a 50% annual growth rate in China for the next several years.<\/figcaption><\/figure>\n

But maintaining leadership \u201cis going to be tough,\u201d Jochen Siebert, managing director of JSC Automotive, told the S&P Market Intelligence report. Volkswagen, in particular, has been striking out with a two-pronged assault, introducing more products and slashing prices on existing ones, like the ID.4 Crozz electric SUV.<\/p>\n

General Motors, along with joint venture partners SAIC and Wuling<\/strong><\/span><\/a>, actually toppled Tesla for several months last year with an all-electric microvan. And despite Musk\u2019s professed confidence, competition is just heating up, said Siebert, cautioning, “Within a few years, Tesla will not be the only one in town. There will be many. It will be so competitive.”<\/p>\n

Tesla charges ahead<\/h3>\n

Tesla clearly isn\u2019t blinking. If anything, it is setting its sights on more growth. Even as production at its existing plants in Beijing and Fremont, California accelerates, it is readying two more assembly facilities in Texas and Berlin. And it has a number of other products in development, including the Cybertruck pickup, the second-generation Roadster and its first-ever commercial Semi truck.<\/p>\n

\"2022<\/a>
For the 2022 model year, Chevrolet expands the number of Bolt variants, adding the larger EUV to the mix.<\/figcaption><\/figure>\n

But Tesla can\u2019t win the new model count. GM recently announced a big expansion<\/strong><\/span><\/a> of its EV program, with 30 all-electric models due out by 2025. VW is planning 50 BEVs. And Ford, Nissan, Honda, Toyota and, well, just about every other automaker, new or established, will have something in the market by mid-decade.<\/p>\n

\u201cWe\u2019ve been expecting this for a while,\u201d wrote Michelle Krebs, senior analyst at AutoTrader. \u201cTesla was the only game in town. Now it\u2019s not. We expect that Tesla sales will increase as the market increases, but there will also be stealing of Tesla\u2019s market share.\u201d<\/p>\n

Of course, when you start out with the massive share Tesla held as the first automaker to offer a long-range battery-electric vehicle, there\u2019s really no way to go up. But that doesn\u2019t mean things can only look down \u2013 not in terms of raw sales, as Tesla\u2019s investment in new plants demonstrates.<\/p>\n

EVs gain momentum<\/h3>\n

Morgan Stanley\u2019s Jonas pointed out that U.S. EV sales rose 34% in February compared to a year ago. By comparison, the overall American market was down about 5%.<\/p>\n

\"\"<\/a>
Tesla’s not just facing an army of new EVs from legacy automakers. Nascent EV companies are coming too, like Lucid with the new Air sedan.<\/figcaption><\/figure>\n

\u201cI don\u2019t see us having to take share away from Tesla. It\u2019s us taking share away from internal combustion engines that really matters,\u201d Peter Rawlinson, the CEO of Lucid Motors told TheDetroitBureau.com<\/strong><\/span><\/a>.<\/p>\n

But with new competition from companies like Lucid \u2014 which will launch its first product, the Air sedan, late this year \u2014 Tesla comes under increasing pressure. Buyers will have more options in more product segments. And, as VW has shown in China<\/strong><\/span><\/a>, and GM has shown in the U.S., there will be more pricing pressure squeezing margins.<\/p>\n

Riding the rollercoaster<\/h3>\n

Tesla came within a hairsbreadth of meeting its 500,000 vehicle sales goal last year and, as Musk was quick to point out in that January earnings call, it reported its first-ever annual profit. But a closer look at the numbers revealed that it still lost money building and selling cars and only crossed into the black by marketing zero-emissions vehicle credits to competitors. Those credit sales will fade away as companies like GM, Ford and others bring their own EVs to market.<\/p>\n

As we\u2019ve seen in recent years, Tesla\u2019s stock price provides Wall Street investors a true rollercoaster ride. The rebound in the automaker\u2019s share price on Tuesday shows that its latest downturn may be short-lived. Then again, traditionally bullish investors may be looking at the bigger picture and adding up numbers that suggest Tesla will be facing a much harder time maintaining momentum in the years ahead.<\/p>\n","protected":false},"excerpt":{"rendered":"

Tesla got a modest reprieve Tuesday, its shares rebounding after a month of heavy hammer blows from investors who drove the stock down by as much as a third. Seemingly always volatile, many analysts attributed part of the decline to increase in competition from Ford, VW and others. Find out what Tesla’s facing and the impact at TheDetroitBureau.<\/p>\n","protected":false},"author":2,"featured_media":147349,"comment_status":"open","ping_status":"closed","sticky":false,"template":"","format":"standard","meta":{"_mo_disable_npp":"","footnotes":""},"categories":[7,8,5,12,9],"tags":[],"make":[45,56,58,79,89,110,113],"post-state":[],"category_old":[118,140,286,150,151,123,127,195,287,133,131,319,289,155,299,248,243,230,132,284,190,125,124,139,148,128,291,207,278,288,232],"acf":[],"_links":{"self":[{"href":"https:\/\/thedetroitbureau.com\/wp-json\/wp\/v2\/posts\/160915"}],"collection":[{"href":"https:\/\/thedetroitbureau.com\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/thedetroitbureau.com\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/thedetroitbureau.com\/wp-json\/wp\/v2\/users\/2"}],"replies":[{"embeddable":true,"href":"https:\/\/thedetroitbureau.com\/wp-json\/wp\/v2\/comments?post=160915"}],"version-history":[{"count":0,"href":"https:\/\/thedetroitbureau.com\/wp-json\/wp\/v2\/posts\/160915\/revisions"}],"wp:featuredmedia":[{"embeddable":true,"href":"https:\/\/thedetroitbureau.com\/wp-json\/wp\/v2\/media\/147349"}],"wp:attachment":[{"href":"https:\/\/thedetroitbureau.com\/wp-json\/wp\/v2\/media?parent=160915"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/thedetroitbureau.com\/wp-json\/wp\/v2\/categories?post=160915"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/thedetroitbureau.com\/wp-json\/wp\/v2\/tags?post=160915"},{"taxonomy":"make","embeddable":true,"href":"https:\/\/thedetroitbureau.com\/wp-json\/wp\/v2\/make?post=160915"},{"taxonomy":"post-state","embeddable":true,"href":"https:\/\/thedetroitbureau.com\/wp-json\/wp\/v2\/post-state?post=160915"},{"taxonomy":"category_old","embeddable":true,"href":"https:\/\/thedetroitbureau.com\/wp-json\/wp\/v2\/category_old?post=160915"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}