Gary Black, the managing partner of The Future Fund discusses the reasons why Tesla deliveries growth has suddenly stalled, listing very interesting reasons.
Follow us today...
Black wrote about the following in a Tweet on his X account. What comes below is from Gary Black who writes that the early EV adopters already have electric vehicles, potential EV buyers not realizing how inexpensive Tesla has become, ubiquity, and the more EV choices in today's automotive market.
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-edged sword. In the beginning of a growth wave, ubiquity helps overcome the 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, the 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's 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.
Do you agree with Gary or is it the economy?
Armen Hareyan is the founder and the Editor in Chief of Torque News. He founded TorqueNews.com in 2010, which since then has been publishing expert news and analysis about the automotive industry. He can be reached at Torque News Twitter, Facebook, Linkedin, and Youtube. He has more than a decade of expertise in the automotive industry with a special interest in Tesla and electric vehicles.
Follow us today...
I like how just because…
I like how just because Tesla didn’t hit a record everything has “suddenly stalled”.
Higher interest rates are…
Higher interest rates are definitely a factor for buying anything at 40k. and any legacy automaker will tell you that you need to promote your product, they never speak for themselves.
The automotive market is low…
The automotive market is low for all now and it's affecting Tesla too. High interest rates are slowing buyers. Toyota rav4 primes used to have a 3 year wait and now some dealerships have dozens sitting on the lots.
Even my 70 year old mom…
Even my 70 year old mom knows the tax incentives and costs. But $37k after tax incentives is still more than the $26k budget she has and the fact that her insurance will double. Tesla’s are only more affordable when you are trading in luxury or high performance vehicles.
Definitely numbers 3 and 4…
Definitely numbers 3 and 4 for me. #3 Way too many Model Y’s out there. Plus 90% of those are black or white. There are also too many Model S’s, which is the only model I considered at all. #4 Once BMW released the i5, I was sold.
I believe the slowing of…
I believe the slowing of Tesla sales is called monopolistic competition. Tesla's business model is pure monopoly.
In my area of Northern VA,…
In my area of Northern VA, there are about 1 Tesla for every 10-15 ICE cars on the road. I am noticing an increase in the new standard "stealth gray" color which replaced the standard white color recently. It would help if Tesla started widely advertising their vehicles. Word of mouth has gotten them this far which is remarkable. Also, pix of a Cybertruck pulling around a Model Y on a trailer isn't going to get folks realizing that most Model 3s and Ys are selling well below the average 2024 car cost of $47K even before any Federal tax credits are considered.
Tesla needs that 25k car…
Tesla needs that 25k car they need another car CT needed a better handling. I know Y is getting a refresh so when that happens that will probably help but Tesla needs to realize you have to change things up more and put more out. There are still so many who don’t want EV cause the sound of that engine and we here in America are always in a rush don’t want to wait to charge.
It's not a shocker - every…
It's not a shocker - every automaker has a BEV option, they are all better than Tesla cars. You don't get the horrors of the Tesla service center 4-12 week delays either, etc.
I can wait till the EV is…
I can wait till the EV is not so complicated to drive on a long trip. Sounds like too much trouble to figure out charging.
A few years ago there were…
A few years ago there were several EVs in my neighborhood, there are no EVs anymore. The early adopters have gone back to gasoline, they have learned a very expensive lesson.
Gary Black is a well-known…
Gary Black is a well-known Tesla-hater and anything he writes should be considered extremely biased and inaccurate. Same for TorqueNews.
It's not true. Only a…
It's not true. Only a handful of automotive news sites cover Tesla daily. Torque News is one of them. Look at Torque News Tesla News coverage, where do you see something that supports your opinion?
Umm because people don't…
Umm because people don't want EV’s! So the people who wanted them now have them and that's why its slowing tremendously.
Dismissing Musk from the…
Dismissing Musk from the equation is bizarre. He has become toxic to the brand, not so much because of his political garbage, but because he demonstrated monumental hubris and misjudgment with Twitter and is seen as increasingly erratic and not paying attention to Tesla. Tesla has gone from the established safe buy to not so safe in a market with increasing competition with the USP of the charger network losing relevance.
$37K is not "inexpensive". …
$37K is not "inexpensive". That is the real problem here. The market has tapped out everyone who can afford a $40K car. The market needs $10K BYD Seagull EVs.