To The Moon

Many have asked us why we think $TSLA deliveries growth has suddenly stalled in 2024, after rising +38% in 2023 and +49% compounded since 2019? We believe there are four factors that have contributed to stagnant $TSLA volume growth and in particular Model Y growth, plus two non-factors:

1/ Early adopters have already bought EVs - many for environmental reasons. To get the next cohort (“rational pragmatists”) to buy, TSLA must help overcome range anxiety by communicating the breadth of its supercharger network and by showing consumers how easy Teslas are to charge (like plugging in an iPhone). Range anxiety is why hybrids have suddenly become so popular, which also hurts BEV growth.

2/ Potential EV buyers don’t realize how inexpensive Teslas have become, with Model Y starting at $37,500 after the $7,500 EV credit. This is pure and simple lack of communication by Tesla to ICE owners about how cheap Teslas are to buy, operate, and maintain. After we get through early adopters, Teslas don’t just sell themselves. Non-EV owners require education.

3/ Ubiquity is a dual edge sword. In the beginning of a growth wave, ubiquity helps overcome fear of buying into a new technology, acting as a stamp of approval. As time progresses, ubiquity becomes a negative, as many consumers don’t want to drive the same car everyone else is driving. In 2023, Tesla Model Y became the best-selling automobile in the world.

4/ More EV choices. From 2017-2023, Tesla had the EV playing field to itself, and could sell every EV it produced. Now every auto brand family (Hyundai, Kia, Ford Mach E and F150, GM Chevy and Cadillac, Porsche, Audi, Mercedes, BMW) has EV sub-brands, and unlike Tesla advertises them heavily. In China, the price war started by Tesla in 2022 has become brutal with many new under $20K EVs launched over the past few years by rival BYD.

Two non-factors mentioned by some as reasons Tesla growth has stalled are Elon’s personal brand and higher interest rates. Sorry, but we don’t buy the argument by $TSLAQ shorts that Elon’s increasingly polarizing Twitter views negatively impact Tesla sales. We know of too many EV owners who both hate Elon Musk’s politics and love their Teslas. On the other side of the ledger, we don’t believe higher int rates are a factor because the economy has been strong and unemployment low, which is far more important than the impact of higher interest rates. Housing starts remain near their highest levels since before Covid. 2024 1Q Auto SAAR was +7% YoY. We have seen estimates of 1Q BEV growth of 15-20% YoY ex-TSLA. Tesla could buy down high auto loan rates to 2-3% rather than cut prices at much lower cost but until recently has not done so. That’s why we and many others argue that TSLA’s lack of volume growth is self-inflicted rather than macro-based.