Tesla’s seeming reluctance to develop new EV models that can expand the brand into new segments of the global auto market, including compact cars, is coming back to haunt it.
Typically the first month of every quarter sees Shanghai set aside anywhere from a third to half its volume for export. Since the wholesale numbers includes cars made both for domestic and foreign markets like Australia, the continued declines signal broader weakness in demand for Tesla.
The CPCA did not yet provide an exact split, data which comes later in the month, but weekly insurance figures out of China indicate domestic Tesla sales in the quarter are trending 15% lower so far.
Either way, Tesla’s valuation appears to be at a fork in the road to borrow a favorite Musk metaphor.
Investors are currently willing to pay close to 100 times over for next year’s earnings based on consensus estimates typically indicates the company is primed for explosive growth. This outsized multiple is based on the conviction that Musk’s high-stakes bet on “real-world AI”, robotics and autonomous ride hailing fleets, will pay off.
Bears argue EV sales figures like those out of China or Europe proves he’s woefully neglected his core car business and trashed his company’s brand. They doubt his AI efforts will be able to justify the kind of valuation of which other Magnificent Seven stocks can only dream.
AI and robotics now represent the linchpin in Musk’s equity story.
