Tesla Q1 sales flatlining, as I have predicted

[leadcounsel]

The much touted Tesla, "year over year" sales, which soared from nothing to a lot, have now started to flatline. It missed sales expectations last year, coming in around 45% on a 50% growth. Now 2023 Q1 sales show a near flatline at 4% growth from Q4 2022. And that's AFTER deep price cuts in some models to stimulate sales.

This fully supports my assessments and predictions that the market is reaching saturation, and combined with domestic and global economic woes, the honeymoon is over and reality is going to set in with Tesla (and this EV craze). A 4% growth is more in line with reality and the rest of the automakers who show a small, sometimes even negative, growth year over year. Like all companies that are instantly flash-in-the-pan successful, their growth tends to soar, then stagnate with market saturation. This is exactly what these numbers tell us. Orders going up 100%, to 45%, to now 4%. While Tesla numbers are moving in the right direction, and better than the other automakers, growth has clearly stagnated for the industry and Tesla specifically with Tesla "down" more than any major auto maker.

https://www.cnbc.com/2023/04/02/tesla-tsla-q1-2023-vehicle-delivery-and-production-numbers.html

"The first quarter numbers represent a 36% increase in deliveries compared to the 310,048 reported during the same period a year earlier, and 4% growth in deliveries sequentially compared to the 405,278 they company reported in the last quarter of 2022."

By contrast (For the "yeah, but..." crowd):
GM Q1 2023 is up 15% from Q1 2022, but down -5% from Q4 2022.
Ford Q1 2023 is up 11% from Q1 2022.
Toyota Q1 2023 is down -10% from 2022.
Stellanis Q1 2023 is down -11% from 2022.
Honda Q1 2023 is flat from 2022.

So, yes, Tesla is the best pig in the puddle in the positive numbers, but for reasons stated the honeymoon is over for now. However, factoring a 41% drop in sales extrapolated figures, Tesla has taken the largest "drop" in demand as a percentage (45% growth to 4%).

With these atrocious numbers I see the headline and analysis terribly misleading but here is the article:
https://www.investors.com/news/us-auto-sales-gm-ford-tesla-lead-strong-first-quarter/

 

[Dave_T]

It does get old reading about Tesla this, Musk that... you can polish a turd, but you'll always have a turd!

 

[fsdork]

If your expert Chicken Little analysis is accurate, we should expect to see TSLA crater relative to other auto manufacturers tomorrow morning. I'll hold my breath.

 

[JeffKeryk]

The much touted Tesla, "year over year" sales, which soared from nothing to a lot, have now started to flatline. It missed sales expectations last year, coming in around 45% on a 50% growth. Now 2023 Q1 sales show a near flatline at 4% growth from Q4 2022. And that's AFTER deep price cuts in some models to stimulate sales.

This fully supports my assessments and predictions that the market is reaching saturation, and combined with domestic and global economic woes, the honeymoon is over and reality is going to set in with Tesla (and this EV craze). A 4% growth is more in line with reality and the rest of the automakers who show a small, sometimes even negative, growth year over year. Like all companies that are instantly flash-in-the-pan successful, their growth tends to soar, then stagnate with market saturation. This is exactly what these numbers tell us. Orders going up 100%, to 45%, to now 4%. While Tesla numbers are moving in the right direction, and better than the other automakers, growth has clearly stagnated for the industry and Tesla specifically with Tesla "down" more than any major auto maker.

https://www.cnbc.com/2023/04/02/tesla-tsla-q1-2023-vehicle-delivery-and-production-numbers.html

"The first quarter numbers represent a 36% increase in deliveries compared to the 310,048 reported during the same period a year earlier, and 4% growth in deliveries sequentially compared to the 405,278 they company reported in the last quarter of 2022."

By contrast (For the "yeah, but..." crowd):
GM Q1 2023 is up 15% from Q1 2022, but down -5% from Q4 2022.
Ford Q1 2023 is up 11% from Q1 2022.
Toyota Q1 2023 is down -10% from 2022.
Stellanis Q1 2023 is down -11% from 2022.
Honda Q1 2023 is flat from 2022.

So, yes, Tesla is the best pig in the puddle in the positive numbers, but for reasons stated the honeymoon is over for now. However, factoring a 41% drop in sales extrapolated figures, Tesla has taken the largest "drop" in demand as a percentage (45% growth to 4%).

With these atrocious numbers I see the headline and analysis terribly misleading but here is the article:
https://www.investors.com/news/us-auto-sales-gm-ford-tesla-lead-strong-first-quarter/

Your analysis is whack. You understand that Q4 is generally the biggest quarter in car sales due to new year models and discounting existing inventory? Rarely does Q1 beat prior Q4 quarter. You point out YOY Q1 showed 36% gain. FQ to FQ is the measure analysts use because comparing quarters is considered the relevant range.

Another thing; Tesla is ramping existing factories around the world and breaking ground on the Monterrey factory. The goal is to smooth the schedule to increase manufacturing and delivery efficiency, aka cost. Tesla has many vehicles in the physical delivery operation. Cars gotta get to customers aroung the world. This is the last stage of the supply chain and is suceptable to the same constraints.

You state an increase is a drop in demand; you sure got me on that one.
You state this supports your opinion on market saturation. What about interest rates? Bank failures? You do correctly point out economic issues, so well done there. It affects far mote than Tesla.

You may remember that Tesla outsold BMW and MBZ combined, VW and others, in US Q4... Who's demand is increasing and who's is declining?

One more thing to understand that may seem inconsequential if you have not worked in a high production envirornment is, there are generally 2 less production days in Q1. Tesla's corporate goal is to make more cars; to increase production and do so in an efficient manner. They produced 441K cars in Q1, another record and they continue to ramp.

Regurgitating numbers is easy. Understanding what those numbers mean in called analysis.

 

[c502cid]

One of the key indicators of declining auto sales right now is interest rates. I have many fleets I sell to tell me that while they need 400 trucks, they can't finance that many at the current interest rates. Tesla is facing the same headwinds.

While I believe saturation point may be met, your analysis applies to any hot new product. It always levels off. Can they sutstain growth at any level is the thing to watch. Is Tesla perfect? No,Tesla has to answer those who live in an apartment and/or don't own their own home among other issues. I sell to a lot of EV companies now, many are a mess (cough cough Rivian). Tesla is the gold standard will likely remain there.

I think calling Tesla done after one quarterly sales report is a bit premature. Not saying you are wrong, just saying let's wait and see before we start shoveling dirt on them.

 

[JHZR2]

The woke folks are cooling off. The number of consumers that need a car are limited at any time. More options for those inclined to get HEV or EV cars is increasing.

Tesla still has a good brand that has good product that is competitive. They should be priced and evaluated like an industrial company.

 

[leadcounsel]

your analysis applies to any hot new product.

That is exactly my analysis.

I think calling Tesla done after one quarterly sales report is a bit premature.

That is NOT my analysis. At all. Nowhere did I say or imply that "Tesla was done." The contrary. I have pointed out radical slowdown in sales growth. Yet still in the positive territory and better than the other auto companies. How could you mis-interpret plain language?

One of the key indicators of declining auto sales right now is interest rates.

Agreed 100%. I've stated many times the micro-and-macro economic issues, including interest rates, are going to cause pain industry wide for auto makers. My very good friend works for one of the majors and is going thru it.

If your expert Chicken Little analysis is accurate, we should expect to see TSLA crater relative to other auto manufacturers tomorrow morning. I'll hold my breath.

You've entirely misinterpreted what I wrote. Purposeful?

The woke folks are cooling off. The number of consumers that need a car are limited at any time. More options for those inclined to get HEV or EV cars is increasing.

Tesla still has a good brand that has good product that is competitive. They should be priced and evaluated like an industrial company.

Agreed! I suspect in a decade EVs will be around 10% adoption in small and mid-sized cars/SUVs. Tesla will probably lead the way. I hope this American company can succeed, but NOT at the cost of ICE offerings and improvements.

 

[fsdork]

You've entirely misinterpreted what I wrote. Purposeful?

Either flatlining sales in a saturated market are a problem for Tesla, or they aren't. If it was enough for you to start a thread about, the financial markets should also react, no?

 

[pezzy84]

Let's wait until we see other makers EV sales #'s before jumping to conclusions. Tesla is running into multiple headwinds at the same time.

1) Aging model lineup. Yeah I know they have been continuously refreshed but someone with a 2018 Model 3 might not want to buy same old same old, same with S, Y, X too. I am not entirely sure about the treating it like a smartphone with incremental updates is the best course when it comes to a $40k+ car.

2) Availability of other makes. Seems availability for competitors opened up pretty rapidly over the past 6 months creating many more options if you wanted an EV but not necessarily a Tesla. 2-3 years ago if you wanted a decent EV it was pretty much only Tesla.

3) Interest rates. Let's see how the other competitors with "volume" EV's did in Q1. I'm counting mainstream volume as the likes of Hyundai, Kia, Ford, GM, VW and to a lesser extent Audi, BMW and MB.

I'll be interested to see how the other makes sales reports come out.

Side note. On the accounting side I feel terrible for the accountants at Tesla, to have sales reports out on a Sunday the 2nd of the month when there was not a single working day in the month of April. Unless they have some non-calendar schedule this seems to validate the ultra toxic and overworked culture that is widely reported.

 

[JeffKeryk]

If your expert Chicken Little analysis is accurate, we should expect to see TSLA crater relative to other auto manufacturers tomorrow morning. I'll hold my breath.

Remember, the market reaction is based on future company/stock performance. Companies often see stock price rises after announcing layoffs; the market sometimes considers this prudent management action.

The bigger question, in my mind anyway, is why the market assigns such lofty forecasts on Tesla. The market expects miracles. Tesla is, and will continue to be, a volatile stock to own.

Another mistake I see is people calling Tesla a "hot new product". Tesla is no longer in startup mode; they are in rapid growth mode. They will continue introduce new products such as the SEMI, Cybertruk and Model 2. In Elon time, of course. The Model 3 refresh Highland project is in changover at Fremont currently; the Y will follow.

 

[leadcounsel]

Your analysis is whack. You understand that Q4 is generally the biggest quarter in car sales due to new year models and discounting existing inventory? Rarely does Q1 beat prior Q4 quarter. You point out YOY Q1 showed 36% gain. FQ to FQ is the measure analysts use because comparing quarters is considered the relevant range.

Still the wrong direction no matter how you slice it. While still positive, as I plainly acknowledged, no matter how you want to put lipstick on it, growth has stalled at Tesla (for reasons cited, depressed economic, interest rates, realities of EV, market saturation, etc.).

We have seen explosive Q v. Q growth, and now slowing saturation.

Q1 2017 vs. Q1 2018: 25,000 vs. 35,000: A 40% increase.
Q1 2018 vs. Q1 2019: 35,000 vs. 63,000: An 80% increase.
Q1 2019 vs. Q1 2020 (pandemic slowdown noted): 63,000 vs. 89,000: 41% increase.
Q1 2020 vs. Q1 2021: 89,000 vs. 184,000. That's 100% increase.
Q1 2021 vs. Q1 2022: 184,000 vs. 310,000. That's 68% increase.
Q1 2022 vs. Q1 2023: 310k vs. 422k, a 36% increase. Record sales yet, this points to saturation and economic woes, down from the prior two years.

Wrong direction measured by Q1 numbers, over the last several years. And Q1 2020 was a terrible quarter for obvious reasons, it should have been much higher, probably 2-3 times that increase. But graphing Q1 for the last 3 years the drop is precipitous. Throwing out Q1 2020 as an anomaly, this chart would look like a large

^

One final point that needs to be emphasized, Q1 2023 numbers are buoyed by the first ever price cuts, and also continued purchase tax incentives, which ICE auto makers don't enjoy (eg comparative advantages to Tesla IOW unfair competition tools).

https://www.forbes.com/sites/alanoh...rice-cuts-federal-incentives/?sh=6a8ee2f83b37

"The Austin-based company said it sold a record 422,875 vehicles, up by about 113,000 units from a year ago. Production also reached a best-ever level of 440,808 units owing to the addition of new plants near Berlin, Germany, and Austin, Texas, that weren’t fully operational in the first quarter of 2022. The delivery figure generally aligned with analyst expectations of about 420,000 units.

Tesla shaved thousands of dollars off the base price of its vehicle lineup months ago, spurred by tougher competition from competitors in China and to ensure that its top-selling Model Y crossover and Model 3 sedan were cheap enough to qualify for a U.S. tax credit of $7,500 created by the Inflation Reduction Act signed into law last year. The U.S. Treasury Department last week tightened requirements for vehicles to qualify for the incentive starting on April 18. At that point, Tesla vehicles may, at best, qualify for only a portion of the credit.

“Clearly, since the Model Y/3 price cuts were implemented early this year demand has been robust during the course of 1Q led by the key China region, which should enable Tesla to at least hit the ~420k bogey for the quarter with possible upside,” Dan Ives, an equity analyst for Wedbush Securities, said in a research note last week. “That said, the macro (environment) remains uncertain and we would not be surprised to see more slight price cuts around the edges both in the U.S. and China over the coming months for Tesla to further stimulate consumer demand.”"

 

[fsdork]

Remember, the market reaction is based on future company/stock performance. Companies often see stock price rises after announcing layoffs; the market sometimes considers this prudent management action.

The bigger question, in my mind anyway, is why the market assigns such lofty forecasts on Tesla. The market expects miracles. Tesla is, and will continue to be, a volatile stock to own.

Another mistake I see is people calling Tesla a "hot new product". Tesla is no longer in startup mode; they are in rapid growth mode. They will continue introduce new products such as the SEMI, Cybertruk and Model 2. In Elon time, of course. The Model 3 refresh Highland project is in changover at Fremont currently; the Y will follow.

Agreed with respect to the correlation between current stock price and future performance. That was my point regarding the (ir)relevance of the Q1 "flatlining sales" pointed to by the OP. Complex analysis of a company's future performance doesn't rely on a few cherry-picked stats.

 

[leadcounsel]

Either flatlining sales in a saturated market are a problem for Tesla, or they aren't. If it was enough for you to start a thread about, the financial markets should also react, no?

You tell me.

If you had a product that had 100% growth, then 70%, now 36%, Quarter vs. Quarter, would you be thrilled or concerned?

After just a few years, that product is moving in the WRONG direction.

 

[leadcounsel]

Regurgitating numbers is easy. Understanding what those numbers mean in called analysis.

Growth is 1/3 Quarter vs. Quarter from just a few years ago. Let's hear your positive spin analysis.

Even with record sales numbers, the radical drop in demand as reflected in slowed growth is the important concern and points to quickly reaching market saturation. Selling more cars, yes. But you had to drop prices and rely on tax rebates to get there (both are 1 trick ponies). Moving in the wrong direction, quickly.

^

 

[JeffKeryk]

Still the wrong direction no matter how you slice it. While still positive, as I plainly acknowledged, no matter how you want to put lipstick on it, growth has stalled at Tesla (for reasons cited, depressed economic, interest rates, realities of EV, market saturation, etc.).

We have seen explosive Q v. Q growth, and now slowing saturation.

Q1 2017 vs. Q1 2018: 25,000 vs. 35,000: A 40% increase.
Q1 2018 vs. Q1 2019: 35,000 vs. 63,000: An 80% increase.
Q1 2019 vs. Q1 2020 (pandemic slowdown noted): 63,000 vs. 89,000: 41% increase.
Q1 2020 vs. Q1 2021: 89,000 vs. 184,000. That's 100% increase.
Q1 2021 vs. Q1 2022: 184,000 vs. 310,000. That's 68% increase.
Q1 2022 vs. Q1 2023: 310k vs. 422k, a 36% increase. Record sales yet, this points to saturation and economic woes, down from the prior two years.

Wrong direction measured by Q1 numbers, over the last several years. And Q1 2020 was a terrible quarter for obvious reasons, it should have been much higher, probably 2-3 times that increase. But graphing Q1 for the last 3 years the drop is precipitous. Throwing out Q1 2020 as an anomaly, this chart would look like a large

^

One final point that needs to be emphasized, Q1 2023 numbers are buoyed by the first ever price cuts, and also continued purchase tax incentives, which ICE auto makers don't enjoy (eg comparative advantages to Tesla IOW unfair competition tools).

https://www.forbes.com/sites/alanoh...rice-cuts-federal-incentives/?sh=6a8ee2f83b37

"The Austin-based company said it sold a record 422,875 vehicles, up by about 113,000 units from a year ago. Production also reached a best-ever level of 440,808 units owing to the addition of new plants near Berlin, Germany, and Austin, Texas, that weren’t fully operational in the first quarter of 2022. The delivery figure generally aligned with analyst expectations of about 420,000 units.

Tesla shaved thousands of dollars off the base price of its vehicle lineup months ago, spurred by tougher competition from competitors in China and to ensure that its top-selling Model Y crossover and Model 3 sedan were cheap enough to qualify for a U.S. tax credit of $7,500 created by the Inflation Reduction Act signed into law last year. The U.S. Treasury Department last week tightened requirements for vehicles to qualify for the incentive starting on April 18. At that point, Tesla vehicles may, at best, qualify for only a portion of the credit.

“Clearly, since the Model Y/3 price cuts were implemented early this year demand has been robust during the course of 1Q led by the key China region, which should enable Tesla to at least hit the ~420k bogey for the quarter with possible upside,” Dan Ives, an equity analyst for Wedbush Securities, said in a research note last week. “That said, the macro (environment) remains uncertain and we would not be surprised to see more slight price cuts around the edges both in the U.S. and China over the coming months for Tesla to further stimulate consumer demand.”"

Please refer to the highlighted portion of your post. Think about it for a second. Why is that? Tesla was building their manufacturing lines in Fremont and then building factories! Of course huge incremental gains were possible. They couldn't make cars fast enough!
Again, regurgitating numbers is easy; it is not analysis. Analysis involves studying and understanding what went into those numbers.
Proper analysis should not ignoring the obvious.

 

[JeffKeryk]

Growth is 1/3 Quarter vs. Quarter from just a few years ago. Let's hear your positive spin analysis.

Even with record sales numbers, the radical drop in demand as reflected in slowed growth is the important concern and points to quickly reaching market saturation. Selling more cars, yes. But you had to drop prices and rely on tax rebates to get there (both are 1 trick ponies). Moving in the wrong direction, quickly.

^

You are assuming Tesla dropped prices to increase demand. Perhaps, to an extent, and it worked. Further analysis suggests Tesla chose to squeeze the competition. The competition is struggling to achieve a profit.

I salute your points citing economic and market conditions. Perhaps you are making the point that this is a win for Tesla to show an increase in these adverse, uncertain times?

 

[UncleDave]

Seems like the street called 420K and they beat it.

 

[fsdork]

You tell me.

If you had a product that had 100% growth, then 70%, now 36%, Quarter vs. Quarter, would you be thrilled or concerned?

After just a few years, that product is moving in the WRONG direction.

The markets will tell you tomorrow if there is more to the story than what you're fixating on. If they don't fluctuate, you're in the wrong rabbit hole.

 

[Dave Hess]

Tesla is a very good company.

I agree with JHZR2 that Tesla should be priced as an industrial company….. not a tech company.

 

[Torrid]

Why are you so riled by Tesla? Geez man, chill out. Not sure what you think of "market saturation", but I must be in some weird bubble. Small midwest town and there's four Teslas on my road alone. I keep seeing more and more in town. Two more in town in the last week. Maybe they're buying used and of course that is possible, but I never thought I would see very many in a midwest town of 16k people.