Tesla Q1 sales flatlining, as I have predicted

[GON]

There is a global move to subscription which has been underway quite some time in nearly every sector. BMW tried it with heated seats and rightfully faced a revolt.

I doubt you'll see a royalty to Tesla from Ford or others - but all other brands EV drivers will be paying tesla for energy at supercharger stations and be happy about it because they actually operate.

Tesla has no deal with apple and doesn't even use CarPlay.

UD,

I speculate TSLA IP is so much more advanced than what any other manufacturer has, the manufacturers will have no choice but to licence IP from TSLA.

Good comment on the supercharger network as another reoccurring revenue source for. TSLA.

 

[UncleDave]

sellers like Tesla use them to misrepresent their selling prices.

I agree with everything in this post except this.

Tesla does not represent the price of the car with subsidies unless you opt to see it that way. They default to standard selling price.

Dealing wit the the skeevy dealer network for anything desirable gets you way above MSRP in added dealer markup and tru-kote.

 

[JHZR2]

To your point here, I agree fully. I think the German auto makers really took their wealthy customer base for granted in a big way. Those overly complicated, expensive and hard-to-maintain, cars depreciated so rapidly and I can only guess the owners were tired of $20,000 engine overhaul and $10,000 shock replacement bills, and losing 90% of their value on the 2nd hand market in a decade. I know I would be livid if my SL500 I purchased for $120k in 1995, was only worth $8k by 2010. Or my A8 was basically scrap value when the timing chain predictably goes at year 12. I think these luxury buyers really loved the high quality at first but then this market became so well known for getting rid of the car when the warranty was over. It's no wonder Tesla has grabbed this market share.

To Tesla's credit, if they can keep their battery replacements reasonable at year 12 when they fail, they might hold value very well for that class of buyer.

That’s a good point. Tesla starting upmarket selling fancy sedans and claiming they were higher in the market than they really are (recall the discussion that a model 3 competes with an e-class/5er?).

The structure of both outfitting and maintaining euro cars in the US sickens me.

You could buy some pretty low end and stripped models of various cars into the 2000s. Not anymore. Excessive fanciness driven by the “I deserve” culture.

Excessive dealerships with overly fancy features. Sure, loaners were nice when dealer costs were more inline with other repair facilities and it was good advertising for the leasing folks to figure out their next vehicle. These days? It’s all just excessive cost and excessiveness in general. Again the fancy crowd and the I deserve crowd.

All that said, parts availability, poor service capabilities, etc. that we’ve heard about from Tesla may show that it’s harder than it seems, and maybe they don’t care about their consumers either. Sooner or later tangible parts need replacement and you can’t just flash software OTA. Sooner or later hvac, paint, rubber, plastic, etc all fail. Tires need to be changed, brakes and fluids too. That’s when we will really see how the Tesla model falls apart or stays solid.

Germany used to produce some fancy enough, complex enough, yet long lived, well made vehicles. I’d put my w126 up against anything in a comparison for longevity with retained quality and performance. Not any newer euro model though…. Fancy dealerships or not.

 

[UncleDave]

UD,

I speculate TSLA IP is so much more advanced than what any other manufacturer has, the manufacturers will have no choice but to licence IP from TSLA.

Good comment on the supercharger network as another reoccurring revenue source for. TSLA.

It is more advanced, but completely different in execution.

Telsa uses a single computer to run the whole car - Unified control - this is why they can do so many things over the air and have so much less wiring.

Everyone else is distributed across multiple computers all performing discreet tasks, all running different code from different vendors.

It could be in the future tesla provides the skateboard and others provide the coachwork.

 

[JHZR2]

I agree with everything in this post except this.

Tesla does not represent the price of the car with subsidies unless you opt to see it that way. They default to standard selling price.

Dealing wit the the skeevy dealer network for anything desirable gets you way above MSRP in added dealer markup and tru-kote.

I just looked and you’re right, they changed that. I hadn’t been on their site in a while. It used to default to the “savings” prices.

Disappointed that the RWD is $42k (reasonable), but the performance model is $53k (out of the range of standard sedans like the Camry and accord).

 

[UncleDave]

I just looked and you’re right, they changed that. I hadn’t been on their site in a while. It used to default to the “savings” prices.

Disappointed that the RWD is $42k (reasonable), but the performance model is $53k (out of the range of standard sedans like the Camry and accord).

They changed that a while ago because people complained even though it was a one click change. I agree its better to give to the poeple straight -

That said the auto dealers are FAR worse, you dont even have the option of a click to get a straightforward quote, they make you practically come in to get a price then shock you with ADM and trukote -its a joke.

Whats the ADM every toyota now? 5K? They want 20K ADM for a Rav 4 prime, which is laughable.

The base 3 matches the v6 camry, and smokes the 4 cylinder camry.
A 53K low 3 second car with a warranty was unheard of prior to model 3 performance.

 

[JHZR2]

They changed that a while ago because people complained even though it was a one click change. I agree its better to give to the poeple straight -

That said the auto dealers are FAR worse, you dont even have the option of a click to get a straightforward quote, they make you practically come in to get a price then shock you with ADM and trukote -its a joke.

Whats the ADM every toyota now? 5K? They want 20K ADM for a Rav 4 prime, which is laughable.

The base 3 matches the v6 camry, and smokes the 4 cylinder camry.
A 53K low 3 second car with a warranty was unheard of prior to model 3 performance.

I agree other dealers can be worse.

I also agree that the base 3 is a high performing (other than range) vehicle, and the performance version gives a level of performance that was unheard of.

That said, even my 300/300 135i is way too fast for practical use on any road.

When we have rented teslas, the pin you back in the seat performance is good for a few laughs, until you start to feel seasick and also realize range is going to suffer worse.

So all the performance looks good on paper, but is virtually worthless in practice and on the roads. It’s true of most any vehicle to be honest, but it’s worse for the tesla because it brings so much excess.

An awd model 3 that has the acceleration of the RWD low end, and the range of the performance or long range, at a superior price, to me would be compelling.

 

[JeffKeryk]

And that’s why Tesla can drop prices. And as they do, their earnings and everything else will come much more in line with the rest of the industry.

For a commodity item like a vehicle you can’t wear massive margins on your sleeve forever and not expect folks to want a better deal. They’re getting closer for me. It’s been a value proposition - as I consumer I want the best product at the lowest cost and minimum profit to the seller besides what let’s them create the next differentiated best product, and pay their non-c suite employees the best they can.

No. Growth requires change. As volume increases, you gain economies of scale in procurement. You spread the fixed costs over more vehicles. And Tesla's cost to manufacture, with Giga Presses and their assembly line speed makes other manufacturers look bad. Ask Herbert Diess, Koji Sato or Jim Farley. Their factories are new, state of the art. A Tesla Model 3 is made over 3 times as fast as a Volkswagen ID.3.
Direct sales model. No legacy union labor contracts. No marketing costs.

Look at VW. They have like 136 production plants across the world. They make a lotta cars. And these factories are old. If the EV to ICE ratio increases, how are they gonna compete? Change over a bunch of factories?
MBZ has 93 locations in 17 countries, BMW has 31 in 15, Ford has 65 worldwide. This ia a logistics management nightmare.
Look at the snotty nosed kid; Fremont produces more cars than any plant in America. And they are in the middle of the Highland project which will make them even better.

Then there is the biggie: Tesla's vertical integration. We are in a software driven world. Heck, only Ford is talking about coding their own firmware; they recently opened a facility in Palo Alto. Tesla is a better run company. And they are just getting started.

We are at an inflection point. Interesting times ahead.

 

[JHZR2]

No. Growth requires change. As volume increases, you gain economies of scale in procurement. You spread the fixed costs over more vehicles. And Tesla's cost to manufacture, with Giga Presses and their assembly line speed makes other manufacturers look bad. Ask Herbert Diess, Koji Sato or Jim Farley. Their factories are new, state of the art. A Tesla Model 3 is made over 3 times as fast as a Volkswagen ID.3.
Direct sales model. No legacy union labor contracts. No marketing costs.

Look at VW. They have like 136 production plants across the world. They make a lotta cars. And these factories are old. If the EV to ICE ratio increases, how are they gonna compete? Change over a bunch of factories?
MBZ has 93 locations in 17 countries, BMW has 31 in 15, Ford has 65 worldwide. This ia a logistics management nightmare.
Look at the snotty nosed kid; Fremont produces more cars than any plant in America. And they are in the middle of the Highland project which will make them even better.

Then there is the biggie: Tesla's vertical integration. We are in a software driven world. Heck, only Ford is talking about coding their own firmware; they recently opened a facility in Palo Alto. Tesla is a better run company. And they are just getting started.

We are at an inflection point. Interesting times ahead.

Don’t disagree with much. But the reality is that they can take margin out of the car cost, still sell at a profit, and gain consumers. When they drop price once or twice more I’ll give a strong look at buying one. And they can do that because of many things you mention, including being run well and with vision.

I agree on the prudence of how they’re dealing with coding and control. But when items start to break, when physical, tangible parts need replacement, the whole “software world” just becomes another cumbersome and lousy impediment to getting things done. Parts are still parts, still need replacement, still need to be real. Still need to be warehoused, delivered, and available…

 

[JeffKeryk]

Don’t disagree with much. But the reality is that they can take margin out of the car cost, still sell at a profit, and gain consumers. When they drop price once or twice more I’ll give a strong look at buying one. And they can do that because of many things you mention, including being run well and with vision.

I agree on the prudence of how they’re dealing with coding and control. But when items start to break, when physical, tangible parts need replacement, the whole “software world” just becomes another cumbersome and lousy impediment to getting things done. Parts are still parts, still need replacement, still need to be real. Still need to be warehoused, delivered, and available…

Sure, We talking about corporate management. Growing a company. Everything you do as a startup will only take you so far. You reach a ceiling; you have to change many things (everything?) to get out of the start up mode. Tesla is in rapid growth mode now. By the time Monterrey starts production, Giga Berlin and Austin have completed their current ramp and be at capacity. Tesla is considering another US factory as we speak.

Will margins suffer in the near term? Sure. That's the price of growth. Here is a bigger question, which I'm sure the stock market is asking... Is Elon, the brilliant entrepaneur visionary, filthy rich idiot Twitter buyer, the leader to take Tesla to that next level?

 

[OVERKILL]

Well I stand corrected on the rail system as it's of no real interest to me and know little about it. Electric will of course never work on mass transit such as flight, cargo ships, etc. Might be able to supplement fuel burning sources somehow, but battery just won't cut it for many uses. For my type of commuting and rural areas I frequent an EV would never be trustworthy. I actually thought my area might be cranking out more toward EVs, but not really the case.
Never said my vehicle doesn't add to emissions, but a manufacturer should just tell the truth and not sugarcoat things plain and simple! EVs might not give off any smell in transit, but they sure do when they ignite.

Cargo ships can easily be nuclear powered, just like the US navy, many icebreakers (including basically all the Russian ones) and even a couple of freighters. The problem will be regulating it, but from a technological perspective, that one is already solved.

 

[UncleDave]

Cargo ships can easily be nuclear powered, just like the US navy, many icebreakers (including basically all the Russian ones) and even a couple of freighters. The problem will be regulating it, but from a technological perspective, that one is already solved.

Yup - it's practically a kit at this stage. I wonder what a giant cargo ships needs vs the smallest SMR's output?

 

[OVERKILL]

Yup - it's practically a kit at this stage. I wonder what a giant cargo ships needs vs the smallest SMR's output?

The big Maersk ones have 2x 30MW engines, the big Hyundai freighters built for Cosco have a single 70MW engine. In comparison, the Nimitz-class carrier has 2x Westinghouse A4W's that produce 194MW, so a bit over-powered for this application, lol.

 

[Torrid]

Pricing appears to start at $60, mid-60s fully loaded. Add state sales taxes and registration closer to $70-75k. Add a home charging unit, I think those are several thousands of dollars. Darn close to $80k. Then, if taking on a loan, closer to $100k with interest rates as they are. My round numbers are close enough, we're discussing a luxury car where the median income of the buyer is 3x that of the average American, who is subsidizing the purchase. The gall of some rich buyers is staggering.

It starts at $50k currently, though they added a new version of the Y recently and the Model 3 is $42k. I’m sure these rich guys aren’t taking full fat loans though either. It’s pretty brain dead to borrow that much money at these interest rates. I know I didn’t. As I’ve said before though, I didn’t qualify for the credit and I don’t think there should be one anyway. Likely if you looked up the buyers of brand new cars you’ll likely will see they make more money than you thought. Lower income earners tend to buy used. There’s plenty of companies that make a $40k car and a $100k+ car as well. Chevrolet, Ford, Mercedes, BMW, Dodge…. Those upper cost vehicles will skew that number. If you’re seeing an average of $150k income, that would mean half would make less than that, right?

 

[DwightFrye]

I find the title of this whole thread to be extremely prejudicial. "Flatlining" implies that the sales are dying, like when a patient "flatlines" on the heart rate monitor. A more accurate statement would be that for Q1 2025 Tesla's sales were rather flat compared to Q4 2022. And that has to be put in perspective, since their Q4 2022 sales were impressive.

Regarding price cuts, as others have mentioned, Tesla's impressive profitabillity allows them to make price cuts with little worry that they will not have enough operating income to continue with Elon's Master Plan For World Domination. If I recall my economics class from mid-1970's college, there is a concept known as equilibrium; if the average vehicle is now selling for around $50k Tesla can simply price their vehicles to be in that ballpark as that is what people are willing to pay for a car that is above the basic transportation level. And they can do so and still maintain a substantial profit margin. Which other makers are envious of. As production costs of EV's come down by Tesla, I don't expect them to drop the costs substantially. And that is because people are willing to pay $50k + for a nice car and is the equilibrium level.

As far as subscription costs ? I don't think so. There is a lot of consumer resistance to that concept. What we will see is licensing fees added to the base price of vehicles. And given how far advanced Tesla is over their competition, just like how Microsoft and others get a piece of the price of so many products, Tesla will receive licensing fees for their battery technology, the operating systems that keep the EV running, and their FSD software option.

 

[JeffKeryk]

I find the title of this whole thread to be extremely prejudicial. "Flatlining" implies that the sales are dying, like when a patient "flatlines" on the heart rate monitor. A more accurate statement would be that for Q1 2025 Tesla's sales were rather flat compared to Q4 2022. And that has to be put in perspective, since their Q4 2022 sales were impressive.

Regarding price cuts, as others have mentioned, Tesla's impressive profitabillity allows them to make price cuts with little worry that they will not have enough operating income to continue with Elon's Master Plan For World Domination. If I recall my economics class from mid-1970's college, there is a concept known as equilibrium; if the average vehicle is now selling for around $50k Tesla can simply price their vehicles to be in that ballpark as that is what people are willing to pay for a car that is above the basic transportation level. And they can do so and still maintain a substantial profit margin. Which other makers are envious of. As production costs of EV's come down by Tesla, I don't expect them to drop the costs substantially. And that is because people are willing to pay $50k + for a nice car and is the equilibrium level.

As far as subscription costs ? I don't think so. There is a lot of consumer resistance to that concept. What we will see is licensing fees added to the base price of vehicles. And given how far advanced Tesla is over their competition, just like how Microsoft and others get a piece of the price of so many products, Tesla will receive licensing fees for their battery technology, the operating systems that keep the EV running, and their FSD software option.

The title seems pretty opinionuated, for sure. Flatlined can mean stopped, like a heart failure or no change. Tesla Q1 is neither. Tesla sold more vehicles, so they didn't die or equal any prior quarter. If you compare to 2022 Q4, that does not make business sense. Business calendars work on a quarter basis, for a reason. A proper analysis is comparing like quarters.

As posted earlier, volume production is desirable because of better factory utilization among other things. Anyone who thinks Tesla lowered cost due to low demand does not understand marketing. Demand is there, but if the cars are too expensive that demand cannot be fully realized. And then there is the pressure on the competition, which is pretty brutal and is getting worse. FYI I am not talking about the EV competition per se; Tesla already dominates the SAM (served available market). I am talking about the TAM (total available market).

 

[leadcounsel]

I find the title of this whole thread to be extremely prejudicial. "Flatlining" implies that the sales are dying, like when a patient "flatlines" on the heart rate monitor. A more accurate statement would be that for Q1 2025 Tesla's sales were rather flat compared to Q4 2022. And that has to be put in perspective, since their Q4 2022 sales were impressive.

Well, titles have to succinctly communicate a idea. Let's explore, based on the evidence presented in this and other threads.
1. Q1 to Q1 has fallen drastically in 3 years, from 100% to 68% to now 35% (estimates, I cannot recall exactly). That is a radical downward trend that cannot be ignored.
2. Q4 to Q1 sales have been close to 0% for the most recent 3 years. That is a near flatline. One would expect to see significant improvements based on a myriad of economic moves that should stimulate sales. That has not transpired. (See Q1 to Q1 comparison).
3. Tesla recently (Q4 or Q1) cut prices. Yet we still see this decline. Tesla has announced yet more price cuts.
4. Tax breaks galore, should be stimulating demand. It's not.
5. Another thread, started today, shows Tesla is cutting back on performance breaks to presumably increase profits. Moving in the wrong direction, IMO.
6. The EV technology is not "unknowable" or magical. Tesla has the primary advantage of an early entry. It's a wildly overvalued company and as soon as the other majors have viable competing vehicles the big T's market share on their EVs will be slaughtered. As it stands now it only has a 5% share. That will probably be divided at least 3 or 4 ways in a few years.

This is not the sign of a confident healthy company from my business analyst perspective with open source information and a casual look at the facts surrounding the company.

Let's speculate for a moment on if the tax breaks and sales cuts go away. It's quite likely that Telsa sales would drastically have fallen more. They might have been unaffected, but that's unlikely. And there's no chance they'd have been better.

 

[leadcounsel]

It starts at $50k currently,

Can you back this up? I looked yesterday and a basic model Y is $54k. When you add taxes, you're into it for around $60 for a base model Y. Add the charging unit installed, you're probably into it for around $65k.

Relatively speaking, not many people can just write a check for $65k without some pain. Lots of people do have that liquidity but are saving it for a new roof, or kids college funds, or emergency expenditures, etc. Not bragging rights and virtue signaling on a Tesla. I think the number of people that wealthy is relatively small and concentrated as the facts show, in a handful of metro areas. Also, one needs ideal weather. This is why we see the greatest adoption in California, followed by Florida and Arizona and Texas. Wealthy metro areas with a lot of warm sunny weather (coupled with solar panels it's a viable economic model for the elites).

And for the record as I've said many times, I think all auto makers and tech companies are in for a world of hurt. Layoffs occurring in these industries. Auto makers selling high priced cars are going to suffer, as few people can afford the cash and the loans are a back breaker right now for the foreseeable future.

 

[JohnnyJohnson]

With the onset of a recession my guess is you will see all car sales flattening! But getting a New Mazda last year I'd say I'm set for 16 years or so unless someone totals it!

 

[JeffKeryk]

Well, titles have to succinctly communicate a idea. Let's explore, based on the evidence presented in this and other threads.
1. Q1 to Q1 has fallen drastically in 3 years, from 100% to 68% to now 35% (estimates, I cannot recall exactly). That is a radical downward trend that cannot be ignored.
2. Q4 to Q1 sales have been close to 0% for the most recent 3 years. That is a near flatline. One would expect to see significant improvements based on a myriad of economic moves that should stimulate sales. That has not transpired. (See Q1 to Q1 comparison).
3. Tesla recently (Q4 or Q1) cut prices. Yet we still see this decline. Tesla has announced yet more price cuts.
4. Tax breaks galore, should be stimulating demand. It's not.
5. Another thread, started today, shows Tesla is cutting back on performance breaks to presumably increase profits. Moving in the wrong direction, IMO.
6. The EV technology is not "unknowable" or magical. Tesla has the primary advantage of an early entry. It's a wildly overvalued company and as soon as the other majors have viable competing vehicles the big T's market share on their EVs will be slaughtered. As it stands now it only has a 5% share. That will probably be divided at least 3 or 4 ways in a few years.

This is not the sign of a confident healthy company from my business analyst perspective with open source information and a casual look at the facts surrounding the company.

Let's speculate for a moment on if the tax breaks and sales cuts go away. It's quite likely that Telsa sales would drastically have fallen more. They might have been unaffected, but that's unlikely. And there's no chance they'd have been better.

Q1 to Q1 has fallen? Please. If you sell 1 unit and then sell 2 you are up 100% but you are only selling 2 cars.
Tesla dominates the EV market and is eating into the total market. Heck, when YOY growth is less than 50% analysts call it a miss.