04.19.23 Don't know what will Q1 margins be. But as always, I would say, you should not care.
Tesla is in the process of a "Hardcore smackdown to gas-powered cars".
I am looking forward and raising my eyes from the little unimportant expectations beats or misses, above 20% or below, EV market share in the US 58% or 62%, or any distracting "news" items surrounding Tesla.
The media and WS are focused on short term declining margins, who cares about a few percentage drop from the only company in the world who actually makes a profit from EV's (BYD recently joined, congrats).
It Also happens to hold the record for these margins per car, and guess what? They are focused on cutting cost and growing, while all legacy Auto are focused on...
1. Cutting huge losses per EV
2. Extending ICE and Hybrid small profits as much as possible Hopefully with government and Union help.
3. Delaying the EV transition as much as possible.
4. Throwing around EV promises, new future models and investment plans.
5. Not expecting any growth, just hoping not to lose to much overall market share to other fast movers in EV and Tesla.
6. All this while not increasing EV production as you might think is necessary facing the demand and YoY EV adoption growth.
Tesla clearly does not care about Used car values, because they know they can't control it after the last 2 year anomaly.
They prefer to preempt the inevitable price strike, rather than be dragged into it by Decreased sales, Revenue or other companies.
Tesla also doesn't care about Shareholders short term. It might sound harsh, but should a company consider Stock volatility more than fundamentals and strategic operations?
I don't think so.
Tesla is going back to 2020 prices pretty much, trying to correct the spike that occurred in 2021 as a reaction to the world's economic situation.
They had the leverage to lead the price hikes then, and they have the huge leverage to lead the price drops now.
Tesla's goal was always to grow, and force others to follow. It might sound unrelatable from the richest man alive, but it is true.
Growing into the ICE market and leading the transition is already producing tons of profits for Tesla, which no one believed was possible.
Profits will continue growing, not from high prices, but from cutting costs, increasing volumes and Offering more attached products, like FSD, entertainment, Energy production and storage utilizing the huge car battery (Not necessarily a variety of car models as legacy is convinced).
Tesla model Y is safely entering the spot of the most sold car model in the world this year, surely passing the Toyota Corolla (1.12m and declining).
Model Y sold for $55k ASP last year, this year probably $45k+, Corolla ASP is below $25k and being crushed in China by low entry EVs mostly from Chinese brands.
Where are the Western EV startups you ask?
Some are faking it and will eventually die hard like Nikola, Faraday future, Mullen, Lordstown and more.
Some have promising products and IP, like Rivian, Lucid, but due to extreme over hype and Macro conditions they have a hard time ahead to prove the path to profitability and mass production.
Chinese EVs, you might wonder? They are going to take on the world, some will fail, but the sector will definitely dominate.
Legacy Auto? Some will get through this financially violent few years ahead. Others will die, but will try to drag governments to bail them.
There is only one western company that has everything lined up for them in this Auto/Energy/Transportation AI with minimum challenges, definitely none more than others, yet I argue much less.
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