Market Thinking

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Do we care about Tesla Vapourware?

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While on the one hand the IPO of Rivian this week should put a final nail in the coffin of Tesla’s cyber truck project, on the other hand Rivian itself looks like it may be too late to the party for Electric pickups now that Ford is producing its own version. Meanwhile another announcement this week from China giant Geely, suggests that the one area where Tesla was still ahead of the pack, electric trucks, is also now under threat. It might not matter for the share price (indeed, it’s difficult to see what does matter) but it does give some insight into what the real world is already doing about fossil fuels in transportation.

In the computer industry, vaporware (or vapourware) is a product, typically computer hardware or software, that is announced to the general public but is late or never actually manufactured nor officially cancelled. Use of the word has broadened to include products such as automobiles. Vaporware – Wikipedia

While talking about fundamentals for Tesla is seemingly pointless these days – it has effectively become the equivalent of a Crypto Trading Token with a car company attached – it nevertheless provides an interesting starting off point for discussing the sector in general and other opportunities more specifically. Thus, we finally get the IPO of Rivian this week, something that we have discussed both positively and negatively in the past. On the positive side it looks a great product, which when we first highlighted it almost two years ago looked something of a game changer. Unfortunately while the IPO is here, the car itself still is not, and thus it risks being the proverbial day late and dollar short. As we noted recently, the fancy valuations being hyped by the usual suspects imply it sells more cars than Tesla, while at the same time Ford, which dominates the pickup space with its P150, is coming up with its own fully electric P150, now likely to be available before Rivian’s version hits the streets. How many of those looking to go electric with pick-ups are also going to take on a new manufacturer, especially when Ford are likely to use their marketing clout and existing dealer network to aggressively compete for the new market? Also, while pick-up trucks are the biggest sector of the market in the US, this is not true in the rest of the world. The one thing we do know I think is that the ludicrous Tesla Cyber-Truck – an English Bull Terrier to the Rivian’s Labrador Retriever – is likely to never see the light of day.

While it’s not only about looks….Tesla Cyber Truck

Meet The Bull Terrier - Dog Notebook

Or Rivian?

Labrador Retriever - Wikipedia

As an owner of a Tesla Model S for the last 7 years, we have been disappointed not with the car itself, but with everything that has followed. The Model X was too slow to arrive and was clearly designed by engineers, with the gimmicky Falcon Wing De Laurean style doors the main culprit. Instead of simply making a pleasing , standard looking, SUV with a 4×4 electric motors, they decided to go ‘futuristic’, implying that the ‘look sophisticated but normal on top, anything but normal underneath’ was an accident rather than a moment of genius. The X was aesthetically unappealing, prone to mechanical failure and, more importantly, way too expensive. They also lost valuable lead time over the mainstream manufacturers who, thanks to dieselgate, have now done a full 180 turn and have now fully embraced not only hybrid but also full electric. The Ford Mustang Mach-e is what the X should have been and is more competitively priced than even the Model 3, while the Porsche Taycan and Audi E-tron GT are competing heavily against the Model S – which is facelifted but now almost 10 years old in the US.

The importance of road haulage in Fossil Fuel consumption

Which brings us to the Truck market. When Tesla announced it plans for an electric Semi back in 2019 (as in tractor unit for a trailer), we saw this as its likely future winner, especially in China, where over half of the road fuel consumption is diesel truck haulage. With its manufacturing base in China, Tesla has the ability to help China electrify its long haul haulage fleet which would make an enormous difference, not only to the air pollution, but also to dependence on imported diesel, which is 70% of all diesel used. Note the energy consumption by user in the table below for China (reproduced from previous article so likely out of date only in the fact that passenger cars have likely risen relatively, the total will be much higher.)

source EIA

However, we have heard little from Tesla since then and it is difficult to tell if this is to be like the heavily delayed Model X or the likely never to be seen Cyber Truck. It’s all gone very quiet as they say.

But then this week, we see this announcement from Chinese auto giant Geely.

Geely launch the Homtruck – has Tesla been left behind here too?

Chinese car company Geely have just announced the launch in early 2024 of the Homtruck, an all electric rival to Tesla’s, still yet to be released Semi. A combination of hybrid and fully electric, the Chinese giant have put a marker down and it will be difficult for US owned Tesla to persuade large haulage fleets to ignore the domestic option. The timing around the Communist Part Plenum and associated announcements on clean transportation is obviously no coincidence and it may be that this is also a form of ‘vaporware’. However, rather like Rivian are likely to be too late compared to Ford, it looks like Geely will be eating Tesla’s lunch in trucks. If so, then it is relatively easy to make a case that in 5 years time Tesla wont be making any vehicles at all and will be a power company. Nothing wrong with that of course, but then that’s talking pesky fundamentals.

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