(Forbes Money) – As the U.S investing public focuses intently on vote tallies from far-flung locales, the race for supremacy in the European electric car market couldn’t be any more one-sided. Volkswagen’s new ID.3 hatchback BEV model, introduced in September, has roared out of the gate and knocked Tesla’s Model 3 into the also-ran category.
The monthly numbers are astoundingly one sided, and of course there must be a caveat here. It is well known on The Street that Tesla manages their business based on quarterly results , and everyone knows Elon and co. maximize quarterly deliveries by gearing up the Tesla marketing machine in the last month of any given quarter. This is obvious. But the extent to which VW”s ID.3 dominated Tesla in European markets surprised even me
So, October, the first month of the fruit quarter, is never going to be a great one for Tesla in Europe, as all Teslas TSLA -0.3% sold there are shipped from the company’s Fremont, CA location. As Tesla continues construction work on its Gruenheide facility near Brandenburg, though, it is inherent to look at demand for Tesla cars, not supply.
There is NO availability issue in selling cars. I have followed the industry for 30 years now and I have bever seen a car shortage, anywhere, ever. Do customers wait for certain cars? Of course they do. Tesla rode hot Model Y sales to a strong year-on year comparison in the third quarter, and it is entirely possible that European customers are waiting for the Model Y, due to be exported to Europe beginning in 2021.
It’s possible, but it is not happening. For sure, penetration of SUVs is growing in Europe (although still nowhere near US levels) and that would benefit the Model Y. Except that only a completely Elon-mad Teslaphile could describe it as an SUV. It’s a car. In fact, to my very trained eye, it is very difficult to tell the Model Y from the Model 3. So, to think that demand for Teslas is “on hold” in Europe because Elon has decided to ship 7,000 extremely low-end (SR+) Model 3s from China to Europe or that customers there are waiting for a new model that looks exactly like the old model is to completely misunderstand the car business.
But, hey, that’s what Tesla’s Wall Street analysts are known for.
So, as I try to reject idiocy (it is hard around election time, granted) I ignore what Tesla analysts are saying and look at reported sales figures. Here are Tesla’s reported sales figures by month in Europe. I would caution you to ALWAYS COMPARE YEAR-ON-YEAR to account for seasonality, and that effect is certainly exacerbated by Elon’s stuff-the-quarter mentality.
European Car registrations
October 2020 October 2019 September 2020
ID.3 2,789 n/a 608
Model 3 37 298 979
ID.3 2,469 n/a 1,989
Model 3 74 121 1,116
Tesla (total) 252 293 3.065
There is only one conclusion to be drawn here. The VW ID.3 is absolutely, unequivocally kicking the Model 3’s backside. It’s really no contest.
So, what’s next? Well, it was largely obscured by election-mania here in the States, but Tesla officially launched two new models off its MEB battery-electric platform—the ID.4 X and ID. 4 CROZZ—in China yesterday. Chinese production started on those two models last week. The combined capacity for the two plants that will be making the ID.4 in China (at VW’s SAIC JV in Anting and its FAW JV in Foshan) is at least 600,000 units per year. According to the CPCA, Tesla registered 82,321 Model 3s in the first 9 months of 2020, the first year of sales for the locally-produced model.
It’s been a strong start for Tesla In China in 2020, but VW is coming. Tesla claims that adding a third shift of Model 3 production at its Lingang facility and the onset of locally-made Model Y production will bring capacity at Lingang to 250,000 per year. That’s cute. That’s also about 40% of what VW can bring, and obviously the low-end Model 3 is NOT selling well in China, or Tesla would not be exporting it to Europe.
Competition is, was and always will be the key variable in the auto industry. Volkswagen has taken the BEV lead from Tesla in Europe, and I don’t think that will ever be relinquished. Remember that VW will begin selling the ID.4 on U.S shores at year-end, with a likely 2021 introduction for that model in Europe, as well.
In China, the situation is much more complicated owing to the presence of the start-ups, a plucky group of 4 electric car-making newbies—Nio, WM, Li and Xpeng—that collectively sold 11,800 units in China in October. These companies—as an investor in NIO stock could tell you—have massive upside albeit without brand recognition, and just like VW is about to, are currently stealing sales from Tesla in China.
So, that’s something that this feckless, lazy, boneheaded crew of keyboard warriors that follow Tesla will never understand from their living rooms. Sales in the auto industry are won and lost in the field, on the ground. VW’s ID3. is winning big-time versus Tesla’s 3.5-year-old Model 3 in Europe now and I believe the ID.3’s SUV cousin, the ID.4, is about to dent Tesla’s sales halo in China and the U.S. So, analysts that constantly put out ridiculous out-year growth numbers for Tesla just don’t get it, either because their firms have been bought off by banking fees from Tesla (Tesla’s last offering listed Goldman, B of A, Deutsche, Morgan Stanley MS +1.5%, Barclays, Citi, Wells Fargp, SocGen and BNP Paribas on the cover) or they are just clueless.
Either way, there is an inefficiency in Tesla’s share price to an extent that I have never witnessed in my long career watching stocks. No one knows anything, but Elon can send as many late-night tweets as he wants. Tesla’s absurd valuation is only ever justified by feckless analysts putting out equally absurd future-year volume figures for Tesla’s car division. Those analysts should take deep breaths ,and look at the evolution of the competitive landscape in the GLOBAL market for BEVs NOW. I am sure they won’t . Trust me, though, competition in the car arena is forever, and BEVs are now (finally) no exception.