Now is it is Tesla (NASDAQ:TSLA) Vs the Automotive World

Now is it is Tesla (NASDAQ:TSLA) Vs the Automotive World

Now is it is Tesla (NASDAQ:TSLA) Vs the Automotive World

$TSLA, $VLKAY, $GM, $F

The world’s giant automakers are planning big pushes into EV production, and none bigger than Volkswagen (OTCMKT:VLKAY) is coming up to challenge fledgling Tesla in its tiny 1 plant niche market.

Ok, Tesla has sold about 500,000 cars worldwide, which accounts for about 20% of all the pure (battery-only) electric EVs on the road today, according to research estimates.

At 250,000 units sold in the US, Tesla has about 2X’d the amount of Nissan Leafs, the # 2 electric car in America. Nissan has sold more than 125,000 Leafs since its late Y 2010 debut GM’s all-electric offering, the Chevy Bolt, has only sold about 36,000 cars since it debuted in Y 2016.

Volkswagen plans  dwarf those numbers, as it intends to build and sell 50-M all-electric vehicles in coming years, VW will be able to price its cars less than comparable Tesla’s by taking advantage of economies of scale.

Volkswagen sold 10.7-M vehicles last year, almost all of them gasoline or diesel powered.

The automotive giants are coming out to slay Tesla.

The Volkswagen ID line is set to debut in Y 2020, and the Audi E-Tron should hit US showrooms this coming Spring. Other Volkswagen brands, including Porsche, are planning their own electric models.

Then comes FoMoCo

Ford (NYSE:F) has committed to spend $11-B to refocus the company on new products such as self-driving and electric vehicles. GM is gearing up its plans and plants too.

Tesla says it is not concerned about the increased competition because it will help its overall goal of transitioning cars globally from gasoline and diesel to electric.

“Every compelling electric vehicle on the road is a win for Tesla,” a company spokesman said.

The Volkswagens, Fords and General Motors of the world come with size and long track records of building cars.

“One area where they have a bit of an advantage is the ability to work with their supply chain to get high quality components, and a supply of raw materials such as lithium and cobalt,” he said. “They … already have factories in place around the world.”

The deep pockets of established automakers also gives them a huge advantage over Tesla, as the far larger and richer established automakers have resources that Tesla cannot touch.

The biggest barrier to the established automakers making a major push into EVs could be that they might not be as profitable for the automakers’ dealers.

Most car dealers make little or no profit on selling new cars, the profit on used car sales and warranty service. The presumption among dealers is that EVs will not require as much service, plus the collective wisdom is that most buyers will not want a used EV.

Note: The majority of Tesla’s automotive sales revenue is recognized when control transfers upon delivery to customers, according to accounting standards. However, as a result of the adoption of the new revenue-recognition rules, Tesla recognized an additional $437.7-M for Q-3 for certain vehicle sales where revenue was previously deferred as an operating lease, and there is much, much, much more.

Hence, the very savvy market analysts skepticism.

And hang on, the SEC is not done with the company. Tesla disclosed in a recent filing that the regulator had subpoenaed it about disclosures regarding its Model 3 production numbers. There are also 2 Justice Department criminal investigations open, 1 on the ‘420’ “funding secured” episode and the other looking at the Model 3 production disclosures.

HeffX-LTN Analysis for TSLA: Overall Short Intermediate Long
Neutral (0.19) Neutral (0.23) Bullish (0.27) Neutral (0.06

Stay tuned…

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Paul Ebeling

Paul A. Ebeling, polymath, excels in diverse fields of knowledge. Pattern Recognition Analyst in Equities, Commodities and Foreign Exchange and author of “The Red Roadmaster’s Technical Report” on the US Major Market Indices™, a highly regarded, weekly financial market letter, he is also a philosopher, issuing insights on a wide range of subjects to a following of over 250,000 cohorts. An international audience of opinion makers, business leaders, and global organizations recognizes Ebeling as an expert.

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