A recent Financial Times article asked if Tesla is at “the end of its golden age of growth,” questioning if the company can find enough customers to match its rapidly rising production capacity. Veteran automotive executive, Bob Lutz, gives Tesla credit for re-establishing technical excellence for the American automotive industry, rapidly pushing the industry toward an EV future. However, Lutz also believes Tesla eventually will be seen as just another automaker versus a high growth tech company because it has no unassailable technological advantages. I now agree with Mr. Lutz, which is why I completely eliminated my position in Tesla shares last year.
However, do not confuse Tesla, the company with an overvalued stock price, with the Tesla that still continues to scale sales. The company sold 1.3 million vehicles globally last year, a 40% increase over 2021. While Wall Street correctly is not been impressed by this performance, automotive competitors should continue to be concerned. Why? If Tesla is a luxury auto brand, which many believe it is, the company now is the best selling luxury automaker in America, beating Mercedes, BMW, and Lexus. The Model Y finished 2022 as the 6th most popular vehicle in the U.S., with over 231,000 vehicles sold. In the small SUV category, only the Toyota RAV4 sold more. Tesla sold 198,000 Model 3 sedans in 2022. This is more than perennial volume leaders like Nissan Sentra, Honda Accord, and Honda Civic.
Tesla is now stealing customers from most legacy automakers. The total U.S. auto market at 13.1 million vehicles is a market that is not growing. In the U.S., Tesla sales increased 44%. To grow sales in a stagnant market, Tesla must be conquesting buyers from competitors. American Honda sales were off 39%, Nissan Group sales declined 25%. Stellantis sales were down 13%. Even Toyota Motor sales dropped 10%. How much of these sales decreases are due to Tesla? That is difficult to determine. However, the company’s recent price reductions surely will not help legacy automotive loyalty. Anyone thinking that Tesla is not impacting legacy auto is probably wrong.
Disclaimer
TaaSMaster, LLC is not a registered investment advisor or broker/dealer. All investment opinions expressed by TaaSMaster, LLC are from personal research and experience of the owner of the site and are intended as educational material. Although best efforts are made to ensure that all information is accurate and up to date, occasionally unintended errors may occur.