Along with the related storylines of the Russian invasion of Ukraine, high inflation, interest rates, jobs and economic growth, Tesla CEO Elon Musk and his $US44 billion Twitter (mis)adventure ended up as one of the big market stories of 2022 for investors.
And nothing looks like changing in 2023 as Tesla faces being overtaken by China’s BYD as the world’s major producer of battery-powered EVs, on top of its rising output of plug-ins.
The late-year travails for Tesla by themselves would have damaged a company’s market value, with weakening sales in China, rising costs and competition, especially from BYD.
But when you throw in the financially reckless Twitter takeover by Musk, it has been a multi-billion-dollar disaster for him and his EV maker and a significant worry for the dozens of lithium-related stocks and their shareholders.
Musk’s personal fortune shrank by around $US200 billion in 2022 as Tesla’s market value contracted by $US650 billion
Weakened by Musk’s purchase of Twitter, Tesla’s share of global EV sales is falling and that will continue in 2023 as competition rises, especially from BYD of China which is now the main rival to Tesla globally.
Hopefully, BYD’s rise (t is also the second biggest battery maker in the world after CATL of China) will offset any problems Tesla’s woes will cause for lithium and related renewable material companies.
Tesla shares fell 10.4% in the first week of the new year after they fell more than 13% in the final week of 2022.
Last week saw reports of below production and deliveries that came in below expectations in the fourth quarter and new discounts in China where competition is intensifying just as most governments ended purchase subsidies for NEVs (New Energy Vehicles).
The latest price cuts in China on Friday saw demonstrations by Tesla owners in Shanghai and several other cities with Reuters reporting that several hundred people were involved in protests against the price cuts which have meant they overpaid for their Tesla vehicles.
Reuters calculated that after Friday’s surprise cuts, Tesla’s EV prices in China are now between 13% and 24% below September’s levels.
Seeing the Shanghai plant is the most profitable of any, the price cuts and protests signal a difficult year ahead in China for Tesla.
2022 could very well turn out to have been the ‘golden year’ for Tesla with everything sliding from now on.
And Australian investors should be very aware of the impact Tesla’s woes could have on lithium demand (and especially market sentiment), especially if the lack of 2022’s purchase subsidies sees Chinese demand and sales of EVs slow this year as the country’s car makers association has forecast.
Investors should remember that sales in the first quarter of 2022 fell compared to the final quarter of 2021 because purchase subsidies ended at December 31 that year.
The Chinese car makers association has forecast a possible fall of 600,000 units in NEV (Battery and plug ins) sales in the first quarter or so of 2023 to 1.5 million from around 2.1 million in the final three months of last year.
The purchase subsidies were added to or introduced in mid-2022 in the wake of the first Covid wave in Shanghai, Beijing and in southern provinces.
Once the size of any sales fall becomes apparent, lithium prices will come under pressure as well as the share prices of lithium producers and speculative stocks.
Figures last week show that Tesla sold significantly fewer China-made vehicles in December than in November and less than in the same month of 2021.
Other producers such as BYD and Nio reported weaker sales in December and blamed that on the impact of the latest Covid wave.
Tesla China sold 55,796 wholesale vehicles in December, down 44.37% from 100,291 in November and down 21.24% from 70,847 in December, 2021.
The wholesale sales figure includes vehicles delivered by Tesla in China, as well as vehicles exported from its Shanghai plant. A breakdown of the figures should be available later this week.
The latest figures mean that Tesla sold 227,791 China-made vehicles in the fourth quarter, up 27.9% from 178,097 in the same period last year and up 20.9% from 188,317 in the third quarter.
Total deliveries in China in 2022 amounted to 710,865 units, up 50.26% from the 473,078 vehicles sold in 2021.
The company’s figures, released on January 2, show it delivered 405,278 vehicles worldwide in the final quarter of 2022, missing forecasts of 420,800 units with Shanghai accounting for 227,791 units or well over 50% – a share that emphasises the importance of the Chinese market and the Shanghai plant to Tesla.
For all of 2022, Tesla had global deliveries (sales) of 1.31 million units, up 41% from 2021’s 936,172 units. Total annual production last year was 1.369 million, up 47% from 930,472 last year.
Tesla started production at two new factories in 2022 — in Austin, Texas, and near Berlin in Germany — and boosted production in Fremont, California and in Shanghai.
