Tesla Gaining Market Share; Stock Jumps 10%+

Whitney Tilson’s email to investors discussing Tesla Inc (NASDAQ:TSLA) stats; You cold; Elon Musk’s big tech bubble ride isn’t forever; Tesla continues to gain market share in China and around the world.

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Tesla Stats

1) Another day, another 10%+ jump in Tesla’s stock. Truly unbelievable. I’ve only seen a run-up like this a few times in my investing career… Some stats (hat tip to Daniel W.):

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  • TSLA is now bigger than Ford + GM + BMW + Daimler + Volkswagen combined
  • TESLA vs EUROPE: Market cap: TESLA = $325bn vs EU BANKS (SX7E) = $310bn; Primary turnover today: TESLA = ~$24bn vs ESTOXX50 constituents = $4bn (SX5EVAL Index )

2) Even though I long ago (under $300) said it was a bad short (and still do), by expressing and sharing even the tiniest bit of skepticism about Musk, the company and/or the stock, I’m getting a handful of hateful and/or mocking emails like this: “Tesla is 1740. Sometimes it really is time to hang it up. Even Ricky Henderson had to… You cold”

I can say that getting emails like this has historically been a GREAT indicator that a bubble was about to burst…

3) Bloomberg’s John Authers calls it a bubble (full text below): Elon Musk’s Big Tech Bubble Ride Isn’t Forever.

Tesla continues to gain market share in China and around the world

4) Leading TSLA bulls Ark Invest just sent this around in their weekly newsletter:

Tesla Continues to Gain Market Share in China and Around the World

By Sam Korus | @skorusARK

During the first half of 2020, Tesla’s market share of battery electric vehicles in China reached 21%, up from 6% for the year in 2019 and 2% in 2018, as shown below. It appears that concerns about Tesla’s ability to sell lower-end cars in China have been misplaced.

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On a global basis during the first half of the year through May, Tesla’s market share increased roughly 300 basis points from 23% on average in 2019 to 26%, as shown below. While many investors used to ask what will happen to Tesla when traditional automakers start making and selling electric vehicles, ARK now wonders how high Tesla’s market share will go, a remarkable turn given that our base case assumption is in the opposite direction, 19%, for 2024.

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5) In response, one of my friends wrote:

Tesla’s EV market share globally is not expanding, at least not globally, and at least not depending on the time period chosen.  Slicing out the BEV portion of the EV market (EV = BEV+PHEV) would of course generate a different result, but how relevant would it be?  Most consumers look at BEV and PHEV very holistically.  In any case, here are the global EV numbers, because those are the ones we have consistently from all geographies:

Global Tesla Model 3 Tesla total Total EV sales Tesla M3 % Tesla total %
Jan 2019 7277 10340 153695 5% 7%
Feb 2019 10436 14050 111541 9% 13%
Mar 2019 33187 38084 224335 15% 17%
Apr 2019 17464 20823 166200 11% 13%
May 2019 17965 23156 179270 10% 13%
Jun 2019 39632 48788 264591 15% 18%
Jul 2019 19057 23284 148144 13% 16%
Aug 2019 21336 26758 157696 14% 17%
Sep 2019 39201 49821 183393 21% 27%
Oct 2019 13359 16565 149552 9% 11%
Nov 2019 25878 31337 176547 15% 18%
Dec 2019 53742 63148 279214 19% 23%
Jan 2020 10013 12779 150613 7% 8%
Feb 2020 13661 16276 116170 12% 14%
Mar 2020 48788 60131 192380 25% 31%
Apr 2020 11761 14793 110274 11% 13%
May 2020 20847 24607 144600 14% 17%

As you can see in the table above, it looks very similar in 2020 as it did in the same time period in 2019.  Once final June numbers are in from all geographies in the next week or two, Tesla’s share should be up — it typically is, in the 3rd month of every quarter.  However, it will then fall again in July and August (just look at the daily European numbers thus far in July; it’s essentially a zero).  All in all, likely a wash over the rolling 3-month period.

So yes, Tesla’s sales and market share are going up right now in China for these two reasons:

  1. Tesla opened its China factory around January 1, 2020.  You mean that Tesla opening a factory in China means selling more cars in China, at least in the short run?  Shocker.  But read the agreement between China (Shanghai) and Tesla and see who has dibs to the economics of this plant: It’s not Tesla.  And look at the absolute numbers: It’s just material to the market overall.  Tesla sells 10K-15K cars per quarter in China.  It’s a drop in the bucket in both relative and absolute terms.
  2. The EV market in China is not doing well.  It was down 32% in May 2020, 29% in April 2020, 51% in March 2020, 65% in February 2020, and 50% in January 2020: http://ev-sales.blogspot.com/search/label/China Yes, this is the shrinking market in which Tesla has gained market share for the first six months of 2020.

So yes, Tesla is gaining share in a shrinking Chinese EV market, from a factory in which any real or would-be profits will first go to the Chinese banks and government entities for a long time.  I can’t believe this passes for bullish analysis by serious analysts.

Look at a market which isn’t Tesla’s home market, and in which there is the greatest amount of competition — that would be Europe — and you can see what has happened to Tesla’s Model 3 market share as we left 2019 and moved into 2020:

Europe Tesla Model 3 Total EV sales Tesla M3 %
Jan 2019 0 33431 0%
Feb 2019 3757 32671 11%
Mar 2019 15771 59741 26%
Apr 2019 3738 37111 10%
May 2019 2489 37399 7%
Jun 2019 11604 47384 24%
Jul 2019 3478 35838 10%
Aug 2019 5286 35278 15%
Sep 2019 17490 58662 30%
Oct 2019 1767 48219 4%
Nov 2019 7380 55033 13%
Dec 2019 22137 77248 29%
Jan 2020 1517 74663 2%
Feb 2020 3589 69538 5%
Mar 2020 16121 84349 19%
Apr 2020 2461 31500 8%
May 2020 2278 46805 5%

As you can see in the table above, Tesla’s Model 3 market share in Europe peaked in the last month of each of the four quarters of 2019.  In 2020, it’s been all down.  One can’t blame the “virus” either because, guess what, that impacted all automakers with similar-length shutdowns.

And since you might be asking: Why “only” the Model 3 for the European numbers?  The Model X and S have almost completely disappeared from the European sales charts, so there aren’t any continent-wide numbers available.  Tesla sells a few hundred units of X+S per month at the most, usually not in the top-20 EV sales chart in all but the fewest countries in Europe.  You can see the European sales numbers here:

http://ev-sales.blogspot.com/search/label/Europe

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