To The Moon

Tesla China sales, including exports, hit a record in November following recent Shanghai capacity increases. But Tesla is offering fresh China price discounts amid increasing reports that it plans to slash or even suspend Shanghai output. It's also offering various year-end incentives in Europe and the U.S.

Tesla stock has fallen on those signs of weak demand, concerns about Elon Musk's tweets on Tesla's brand, and further Musk share sales. Tesla shares have plunged to bear market lows, suffering its worst weekly loss since the Covid crash. TSLA bounced on Dec. 19 as as Musk conducted a poll in which a majority of Twitter users wanted him to step down.

Tesla Vs. BYD Sales

Tesla reported Q3 deliveries of 343,830 cars, up 42% vs. a year earlier and above Q1's record 310,048. But that was below analysts' estimates of above 360,000. Tesla produced 365,923 vehicles in the latest quarter, more than 22,000 above deliveries.

Tesla delivered 325,158 Model 3 and Model Y vehicles in Q3, along with 18,672 Model S and Model X luxury EVs.

BYD sold 230,427 all-electric and plug-in hybrid vehicles in November, up 153% vs. a year earlier and 5.8% vs. October. That includes 229,942 personal vehicles and 485 commercial units. Of those personal vehicles, some 113,915 were fully electric, or battery electric vehicles (BEVs), up 147% vs. November 2021. Plug-in hybrids shot up 164% to 116,027.

Over the past three months, BYD has sold 649,502 BEVs and PHEVs, including 312,013 BEVs.

BYD's 90%-owned Denza unit reported sales for the first time, with 350 Denza D9 minivans sold in October and 3,481 in November. The D9, which comes in BEV and PHEV formats, starts around $50,000. Mercedes-Benz owns 10% of Denza.

Tesla Expansion, Demand

Tesla opened its plants near Berlin, Germany, and Austin, Texas in March and April, respectively. Model Y production remains sluggish for those sites, but is slowing improving.

Recent upgrades to the Tesla Shanghai facility significantly boosted production capacity. But Tesla China demand is struggling to keep up with increased output.

Tesla sold a record 100,291 China-made EVs in November. That includes exports.

But there are widespread reports that Tesla will now slash China production with demand not keeping up with extra output.

The EV giant has denied those concerns.

Tesla cut actual Model 3 and Model Y prices in China on Oct. 24 by as much as 9%.

Tesla is now offering a 6,000 yuan ($860) discount on inventory cars in China, on top of an existing 4,000 yuan insurance subsidy. Along with other incentives, Tesla China is offering over 21,000 yuan in incentives.

All that's before government subsidies of 11,088 yuan. Those government subsidies expire Dec. 31. So buyers will be paying more for many Tesla vehicles, and other EVs, in 2023. That should be boosting demand at the end of 2022, but create a new headwind in 2023.

Tesla exported more Shanghai vehicles in Q4 to ease local demand concerns. However, that could drain European backlogs.

Germany will reduce EV subsidies as of Jan. 1. Norway is ending subsidies. Sweden has just ended subsidies with U.K. subsidies winding down soon.

Even with some pull-forward demand due to the expiring subsidies, Tesla is now offering 10,000 free Supercharging kilometers in Europe for taking delivery before year-end. It's also offering some Model Y discounts in the U.K.

Over in the U.S., many Tesla vehicles will be eligible for new U.S., tax credits of up to $7,500 as of Jan. 1, subject to a variety of conditions.

That's spurring many would-be buyers to delay purchases or delivery until Jan. 1. So Tesla is offering $3,750 off and 10,000 free Supercharger miles for people taking U.S. delivery of a Model 3 or Model Y before year-end.

Meanwhile, Tesla reportedly will soon announce plans to build its next EV plant in northeastern Mexico. That would offer a relatively low-cost site while still being close to the U.S. market. It's unclear which vehicles might be produced at the plant, which presumably would not be operational until 2024 at the earliest.

Tesla has solar and battery storage businesses, but both are a small part of total revenue.

Tesla also generates revenue via its Supercharger network. It's starting to open its Supercharger network to non-Tesla vehicles in parts of Europe, where third-party charging stations are common. In the U.S., the Supercharger network is still a big moat for Tesla, but the automaker may open at least some stations to attract new subsidies.

Tesla CEO Elon Musk tweeted on Thanksgiving that Full Self-Driving Beta is now available to any FSD owners in North America who request it.

That could allow Tesla to recognize more deferred revenue from FSD. Tesla's self-driving efforts have been a key revenue driver and brand builder.

But Full Self-Driving is not full self-driving. Even FSD Beta is a Level 2 driver-assist system, while many U.S. and China rivals are rolling out Level 4 robotaxi services in select urban areas.

The Justice Department reportedly is conducting a criminal probe of Tesla's self-driving claims. The SEC has a civil probe of Tesla's claims. The California DMV in July accused the EV giant of misleading customers about Autopilot and FSD.

The National Highway Traffic Safety Administration has expanded an Autopilot probe multiple times, looking into crashes into stationary emergency vehicles, "phantom braking," in-cabin cameras and even how Tesla assembles reports that claim to show Autopilot's safety benefits.

Still, Tesla raised the price of FSD in North America to $15,000 from $12,000 in early September.

An Optimus robot prototype was unveiled at Tesla AI Day on Sept. 30, with limited mobility. Musk said Optimus should go on sale in 3-5 years for less than $20,000. Most experts say general purpose humanoid robots are decades away.

It looks like a good buying opportunity.

DYODD

@TigerStars