Tesla Expected To Report Declining Sequential Deliveries In Octorber – Shortseller

HFA Padded
HFA Staff
Published on

Stanphyl Capital’s commentary for the month ended September 30, 2023, discussing their short position in Tesla Inc (NASDAQ:TSLA).

In early October Tesla is expected to report declining sequential deliveries vs. Q2 despite yet more continual worldwide margin-slashing price-cutting. In other words, Tesla is now just another low-margin car company forced to continually cut prices to try to juice its delivery volume, and its annualized earnings (in an industry with typical PE ratios of 4x to 8x) are now only around $3/share (a decline from 2022’s figure), while its high-single-digit operating margin is down to roughly “industry-average.” (As for Tesla’s irrelevant “energy business,” it accounts for only around 6% of revenue and likely has a net margin in just the mid-single digits.)

Q2 2023 hedge fund letters, conferences and more

Tesla Inc TSLA
ifeelstock / Depositphotos

Tesla’s Opens Up Its Charging Stations To Other Manufacturers

To make matters worse, Tesla recently announced that it will open its U.S. charging stations to cars from most other manufacturers which, in turn, will adopt Tesla’s connector and charging protocol. (Those competitors are building their own networks, too.) Seeing as many people only buy a Tesla instead of a competing EV in order to access those chargers, and seeing as all the competing charging networks will also adopt this protocol while paying Tesla nothing (Tesla open-sourced it), this will cost Tesla far more in lost auto sale profits than the pennies per share it may gain from charging profits.

Meanwhile, Tesla has objectively lost its “product edge,” with many competing cars now offering comparable or better real-world range, better interiors, similar or faster charging speeds and much better quality. In fact, Tesla ranks near the bottom of both Consumer Reports’ reliability survey and the 2023 JD Power survey:

JD Power 2023 US Initial Quality Study

Tesla’s poorly-built Model Y faces competition from the much better made (and often just better) electric Hyundai Ioniq 5, Kia EV6, Ford Mustang Mach E, Cadillac Lyriq, Nissan Ariya, Audi Q4 e-tron, BMW iX3, Mercedes EQB, Chevrolet Blazer EV & Equinox EV, Volvo XC-40 Recharge, Honda Prologue and Polestar 3, as well as multiple Chinese models in Europe and Asia. And Tesla’s Model 3 now has terrific direct “sedan competition” from Volvo’s beautiful Polestar 2, BMW’s i4, Hyundai’s Ioniq 6 and Volkswagen’s ID.7, as well as many local competitors in China.

And in the high-end electric car segment worldwide the Porsche Taycan outsells the Model S, while the spectacular new BMW i7, Mercedes EQS and EQE, Audi e-Tron GT and Lucid Air make the Tesla look like a fast Yugo, while the extremely well reviewed new BMW iX, Mercedes EQS SUV and Audi Q8 eTron do the same to the Model X.

And oh, the joke of a “pickup truck” Tesla first previewed in 2019 won’t be much of “growth engine” either, as by the time it’s in meaningful mass-production in 2024 that grotesque-looking kluge will enter a dogfight of a market vs. Ford’s F-150 Lightning, GM’s electric Silverado, the Dodge Ram REV and Rivian’s R1T.

CFO Suddenly Quits

Meanwhile, in August Tesla’s CFO suddenly quit (or was fired) on no notice, the latest in a series of sudden and unexplained Tesla CFO departures. This may be tied into the possibility that the DOJ is close to criminally indicting Elon Musk following the revelation of a massive & systemic Musk-directed consumer fraud regarding the range of Tesla’s cars, his alleged attempted theft of company assets to build himself a house, and Handelsblatt’s story about a massive & systemic Tesla safety cover-up while people continue to die in (or because of) Teslas at an astounding pace. Regardless, whether from these transgressions or something else, Musk will go down because fraudsters like him always do.

Meanwhile, the NHTSA has initiated the first of what will likely be multiple recalls of Tesla’s fraudulently named “Full Self Driving” (even before the aforementioned safety cover-up revealed by Handelsblatt), and in January it was revealed that Elon Musk personally directed its fake, fraudulent promotional video (something extremely similar to what Theranos did with its blood machines and Nikola with its truck).

The refund liability potential for Tesla for this is in the billions of dollars, and possibly even the tens of billions if a class action lawsuit proves that the cars involved were purchased solely due to the (fallacious) promise of “full self-driving.” And, of course, there will be a massive “valuation reappraisal” for Tesla’s stock as the world wakes up to the fact that its so-called “autonomy technology” is deadly, trailing-edge garbage that Consumer Reports now ranks just seventh vs. competitors’ systems (behind Ford, GM, Mercedes, BMW, Toyota and Volkswagen) and Guidehouse Insights now rates dead last:

Tesla vs Others

Yet Tesla has sold this trashy software for almost seven years now…

Full Self Driving

…and still promotes it on its website via the aforementioned completely fraudulent video!

Another favorite Tesla hype story has been built around so-called “proprietary battery technology.” In fact though, Tesla has nothing proprietary there—it doesn’t make them, it buys them from Panasonic, CATL and LG, and it’s the biggest liar in the industry regarding the real-world range of its cars. And if new-format 4680 cells enter the market, even if Tesla makes some of its own,  other manufacturers will gladly sell them to anyone, and BMW has already announced it will buy them from CATL and EVE.

Meanwhile, Here Is Tesla’s Competition In Cars…

(note: these links are regularly updated)

And in China…

Here’s Tesla’s Competition In Autonomous Driving; The Independents All Have Deals With Major OEMs…

Here’s Where Tesla’s Competition Will Get Its Battery Cells…

And Here’s Tesla’s Competition In Storage Batteries…


Mark Spiegel

Stanphyl Capital

HFA Padded

The post above is drafted by the collaboration of the Hedge Fund Alpha Team.