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Is the $TSLA/China relationship at risk? First, context: China is immensely important to $TSLAQs growth narrative. Many expect Shanghai to outproduce Fremont, some predicting replacement. Without China, sales would've been less than 60k in Q2, a steep decrease Y/Y. Why at risk?
1)
production dropped 10% M/M in June, to a total of 10.3k. Annualized this is 75K less than M3 production capability as per Q2 earnings report. Given glut of SR inventory, # of price cuts, and departure of Robin Ren, its reasonable to think that things aren't going as planned.
production dropped 10% M/M in June, to a total of 10.3k. Annualized this is 75K less than M3 production capability as per Q2 earnings report. Given glut of SR inventory, # of price cuts, and departure of Robin Ren, its reasonable to think that things aren't going as planned.
2) China Model Y was originally expected to debut in 2021 but is now expected to be moved up as early as this fall. Why pull up cannibalization?
3) 2 mysterious production halts in Q2. Rumors point to supply and demand challenges. Less production = less employed= less happy CCP
3) 2 mysterious production halts in Q2. Rumors point to supply and demand challenges. Less production = less employed= less happy CCP
4) In May, Tesla secured a $565 million dollar loan for use only in Shanghai. Rumors are that this was a drawer agreement with many stringent restrictions and guarantees. (see thread: https://twitter.com/StultusVox/status/1258967538131775488?s=19).
5) Elon has made a few, shall we say, tone deaf tweets regarding communism. See: https://twitter.com/StultusVox/status/1280204582602321923?s=19
6) As @passthebeano points out, Chinese propaganda outlets, which were full steam in support of Tesla in Jan-Feb, have been (relatively) quiet recently:
7) Tesla has stumbled out of the gates with consumers. See brand issues: https://twitter.com/StultusVox/status/1267959987562860545?s=19
8) China consumer protection courts recently convicted Tesla of fraud for selling a damaged vehicle and attempting to cover it up. https://twitter.com/StultusVox/status/1279236381965987841?s=19 There are dozens of additional cases in the system, including for when Tesla tried to bait and switch HW 3.0 with 2.5
9) Multiple very high profile autopilot crashes have gone viral with millions of views including this one: https://www.forbes.com/sites/bradtempleton/2020/06/02/tesla-in-taiwan-crashes-directly-into-overturned-truck-ignores-pedestrian-with-autopilot-on/ and the one I posted yesterday.
10) $TSLAQ in China! A number of anti-tesla activist have organically emerged in China, many of who were early adaptors who grew disillusioned with the company or believe it is a fraud. Follow a few of them here:
https://m.weibo.cn/u/1652969205?uid
https://m.weibo.cn/u/5476536320
https://m.weibo.cn/u/1652969205?uid
https://m.weibo.cn/u/5476536320
Of course, things could be going great in China and I could be overly pessimistic. The market certainly disagrees with me. However, to my eyes, there are substantial risks with China that many $TSLA bulls and bears alike aren't pricing in.
