Tesla are ramping, and growing at rapid rates. Every time someone buys a Tesla, it means
they didn't buy someone else's brand, which means Tesla ate their market share. But who's
market share is Tesla mainly eating up?
For starters I think any brand that is generic and just built for the sake of it, is gone.
Tesla will eat all of them up. Because Tesla offer, or will offer, a more affordable, safer
better version for the consumer who cares about what they get for the money. This may
take a while for the consumer to catch on, but probably not that long. Brands that lack
the like of heritage, prestige, history, class, things that consumers are willing to pay more
for.
On paper, Tesla will beat absolutely any other electric vehicle, like for like. Tesla will
always have the longest range and best performance, along with a host of technological features
that simply can't be matched.
And one company that lacks exactly all the things I am thinking of, is GM. Anything GM
can do, Tesla can do so much better, and at less cost. Especially when Tesla start offering
a dozen or so different models, rather than just 4. Teslas will just be much better value
in every way, and before long Tesla will be offering their standard range vehicles with
their in-house LFP batteries. I say before long, which means well before GM will ramp
up, which is what long is. It's a long way ahead for GM to get even a million EVs a year,
and when their electric Hummer starts catching fire, like the Bolt, because they went with
pouch batteries, then surely their brand is as up in flames as their cars.
Of course GM is not a high quality brand, it is a mass market brand, so it has to undercut
Tesla on price, unless they go for their extreme brands like Hummer or Corvette. Other than
that it's mass market. And Tesla is the mass market EV brand, not GM. And by the time GM
are up to a supposed million EVs a year, which they will surely go bankrupt before, then
Tesla have likely taken so much of their ICE market anyway, there wont be any market left
for them anyway. But right, Tesla is taking away GM's market. So their ICE sales keep
dwindling, and they lose more economies of scale, less sales with higher relative OPEX,
turns profits into losses, added on to extra debt, sounds like a sure path to bankruptcy.
Likely GM will have to be downsizing the whole way down, meaning they could lose support
from the UAW or white house, and no bail outs. But even if that wasn't the case, what is
there left to bail out? Why keep a company alive, that makes cars, that no one is buying?
Is this a path that could actually happen? Sounds insane right? Well let's not forget
what Lord Keynes "The government should pay people to dig holes in the ground and then
fill them up." Yes, he really said that. And the governments are mainly running on Keynesian
economics now. The kick the can up the road and hope approach, and further exacerbated
by modern monetary theory.
But I am not sure that would work, the government would be better off forcing people to buy
GM's cars, or incentivizing them with massive subsidies, or rebates. Oh wait, that's what
they are doing. The Build Back Better, EV Bill, is GM's bail out already. Also the government
aren't made of money, just currency.
The faster Tesla ramp up in the US, the quicker GM is gone. And not only are Tesla ramping
up Fremont 50% more, they are close to opening this massive new state of the art facility
in Texas. Even with Tesla ramping up, they still can't
serve all their demand, and have a huge backlog already, and when and if the EV rebates kick
in that backlog will get even more crazy. There could be a further million pre-orders
on the Model Y in the US, which might take over a year to fulfill. Now do you think it
likely that these million customers will buy a GM whilst they are waiting for their Model
Y? Or will they just hold on to their existing car for an extra year? That was rhetorical.
Also the Cybertruck will compete against the likes of the Chevrolet Silverado, pick up
trucks being GM's more profitable market segment.
But if GM's sales are down, then they wont be able to sell enough to cover the running
cost of these factories. Remember the profit margins are so thin as they are, they need
economies of scale. So if sales start to drop opex becomes relatively larger, until they
have to close down a factory, and another, and another.
In 2016 GM was at over 10 million sales a year, in 2020 they were down to under 7 million.
Dropping about a million a year consistently. That's global sales. In the US they went down
to 2.5 million cars in 2020 down from 2.9 million the previous year. About a 14% drop
year over year. I know there are macro effects too, and supply issues like chip shortages.
But this is a cheap brand, that is not Tesla's market, right? Well according to Kelley Blue
Book, the average transaction price in January of the 2021 calendar year among the four U.S.
GM brands (Buick, Cadillac, Chevrolet, and GMC) was $44,204. Tesla's was $48,000 in Q3.
But remember, Teslas come with no fuel or servicing costs, meaning a Tesla is on average
lower cost to own than a GM in the US.
But almost half of GM's sales are from China too, and the Chinese are building up a huge
domestic EV market there, ok sure GM actually does have a joint venture with the Wuling
Deathtrap, yea, GM don't care about your safety. But I think China is GM's most profitable
market, apparently the Chinese even think Buick is a prestigious brand or something.
Well so is Tesla in China too. GM even have an electric Buick in China, don't get too
excited it only has 177 miles of range, and is hideous. GM is not a cool brand. Tesla
is. China will eat up GM's Chinese market share
with their domestic EVs. I mean what do GM even have to put up a fight over there, a
few electric Hummers. They have brought a bread knife to a nuclear war fight.
We hear that GM are going to bring out 30 or so models of EVs, yet they show us nothing.
They can't even come up with models, other than the Cadillac Lyriq and maybe an electric
Silverado.
GM is a junk brand, with junk cars, they can't undercut Tesla, Tesla is going to eat them
up, and spit them out. Telsa is lower cost and superior in every single way. GM can't
come close with their electric offering, they are totally clueless about the technology.
The CEO lies through her teeth consistently, but is well connected, so much so that the
president of the united states will also happily lie through his teeth too to re-enforce GM's
lies. They must lie about so much else too. They obviously can't be trusted in anyway.
Perhaps Mary will go for Biden's job next, she obviously has what it takes to be a great
politician.
GM is a generic corporation that games the system, they don't make great products for
the customers. Now they have met their match, and they are in serious trouble. You may think
they are going to fake it til they make it, but they're faking it until they brake it,
the bank that is, when they go bankrupt. I think they will just end up making too large
a losses.
As for their hundred plus billions of dollars of debt, well I am not sure how that will
go yet. I think people will still need cars, they may not depreciate as much as people
think just because they are ICE. Although there is always oil prices to add into the
mix. But there simply aren't going to be enough EVs to go around, probably not even PHEV either.
So there is a chance that consumers will not renege on their debt for their ICE vehicles.
Which is probably good, as otherwise it might create a financial crisis too. I think GM
can go bankrupt all by itself without also taking down the banks.
I think there will be a lull in car availability, people will hold on to what they have, until
more electric vehicles are available at more affordable price points. Including PHEVs.
And depending on when this all happens perhaps Robotaxis might be able to supplement some
of this too. But this will occur before the compact Tesla is up in volume production.
So how will we have robotaxis then? Well there could be a few million Teslas in the US, that
are all robotaxi compatible. I know what you all say, "no way will I add my robotaxi to
the fleet", well maybe, but what if it gave you $20,000 a year, or $30,000 or more, and
what if its a recession too, and you lost your job as well. I know we think of Robotaxis
as a cheap affordable form of transport, but it could also act as a necessary bridge to
get us through the transition when there is not enough supply to meet the demand, due
to the likes of GM going out of business and having less supply.
Remember even at this robotaxi price points, well they are still likely cheaper than an
Uber, perhaps not cheaper than owning your own car over the long run, but if there aren't
enough cars, then you have no choice. The important thing is that we still have transportation,
and offer some bridge in the meantime if there is a serious deficit in vehicles, so that
the economies can still cope.
Anyway, let me know how you see GM playing out. I think their demise will correlate with
how fast Tesla can ramp up.
Thanks