Tesla’s (NASDAQ:TSLA) EV Industry Lead “Will be overwhelmed”

Tesla’s (NASDAQ:TSLA) EV Industry Lead “Will be overwhelmed”

Tesla’s (NASDAQ:TSLA) EV Industry Lead “Will be overwhelmed”


  • The assumed Tesla “lead” in EVs will be overwhelmed by automotive industry leaders that are very efficient and very profitable competitors.
  • Consortium’s of industry participants will share development costs and adopt standards for “autonomous driving” so that an isolated company like Tesla will be unable to compete.
  • Volkswagen Group (OTCMKT:VLKAY) is planning 27 EV models across 4 brands Vs 4 models or less for Tesla.
  • Aside from competing against very profitable and very large car companies, Tesla cannot compete with Amazon

With the market’s focus on Tesla’s (NASDAQ:TSLA) erratic and unpredictable M3 production ramp and COB/CEO Elon Musk’s erratic and unpredictable behavior, there has been little focus on larger trends which will ultimately overwhelm Tesla (NASDAQ:TSLA) into being a cultish niche player at best should it survive.

Tesla’s current vehicle lineup of 3 EV already makes the company into little more than a niche player.

At current price points for its EVs the total annual demand for its cars is no greater than 300,000 a year. Such a cap for demand has also already been illustrated by the fact that total MS and MX sales have been flat at an annual rate of around 100,000 per year for the past 2 years.

Therefore it reasonable to assume that sales of $50,000 to $60,000 versions of the M3 would be no more than 200,000 per year – and may actually be a lot less once 2 years of demand begins to be met.

The Big Q: Will the company be viable financially at such a low production rate?

The Big A: When comparing an annual production rate of 300,000 vehicles against Tesla’s current debt of over $11-B and its annual interest costs approaching $700-M, the burden is about $36,000 of debt and over $2,000 of interest costs for each vehicle produced.

Notably, that alone is a significant disadvantage in an industry that operating margins are typically under 5%.

Think about it…

HeffX-LTN Analysis for TSLA: Overall Short Intermediate Long
Bearish (-0.28) Neutral (-0.04) Neutral (-0.23) Very Bearish (-0.58)

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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