CA - Tesla China: Counting The Competition

2024-03-06 09:37:37 ET

Summary

• BYD Company Limited is and will remain the dominant electric vehicle player in 2024. That's not my focus.
• Another battle is between Tesla, Inc. and other EV producers. Overall January sales were down, as were Tesla's (-47%) and BYD's (-31%). In contrast, sales rose for Volvo, Changan, and Seres.
• The Model Y is aging and faces greater competition in the Chinese B SUV segment. Letting Giga Shanghai capacity utilization fall will impair margins. Discounting will likewise impair margins.
• Will the A segment Model 2 "Redwood" help? There are already strong-selling EVs below its $25,000 target. Above that price, potential customers upgrade to a "B" segment SUV. So, likely NO.
• In the background is a red flag, poor January sales: BYD -31%, Tesla -47%, NIO -44%, XPeng -58%. Only Changan, Geely and Seres rose. February will likely be worse, March weak.

Preface

We're coming out of the Lunar New Year holidays, which began February 10 ^th , including 8 days of official holidays. This year, there are 240 million people traveling across regions to their natal towns and villages, and many more traveling within a region, for over 470 million trips – China is, after all, a country of migrants. The FT reports that 80% of these trips were by private car. But back to long holidays: on February 18 ^th , one web site hadn't updated since the 8 ^th , and another since the 6 ^th .

Car shopping websites didn't update because, sales-wise, nothing happens over the holidays. Dealerships are closed. Registration and insurance offices are closed. Now that sites are refreshing, you can find lots of videos of the car trips home. One theme is getting stuck in snow and (for EVs) running out of juice when neither roads nor chargers have been plowed. And smooth trips, too, which provide the fodder for lots of car reviews....

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