Car Wars: China vs Tesla


What have you done for me lately?

You are ignoring what @btresist is saying about the Gigafactory coming online and Tesla being far more competitive than the others.

I am claiming zero expertise but I get it when people won’t listen or admit things will look different tomorrow. It is a foul conversation when no one can see the difference and at times admit they are wrong. Why say anything if all you are is right?


Leap you misunderstand what Albaby is doing. He argues with people to find out more on the subject. It can be tedious but he might even agree with them, but as long as he is taking the other side of the argument he is always gleaning more information. What I like about arguing with Albaby is that where can I go and talk to a lawyer for free? We all have ulterior motives. :joy: :joy:



2022 BEV registrations for EU (1.1M), EFTA (184,000), and UK (267,000). The newest figures just released for August 2023 noted upthread were for the EU so I tried to make apples-to-apples comparisons. Best guess based on accelerating BEV sales as I noted above is 1.8M BEVs for the EU in 2023. Wouldn’t be surprising if the EFTA and UK add another 500,000 BEVs based on 2022 performance.

So 2022 EU+EFTA+UK = 1.5M compared to a projected 2.3M (1.8M+0.5M) in 2023. That’s a 50+% increase in BEV Europe registrations, with Tesla sales so far increasing at 3 times that rate. Woot! Woot!

Your error seems to be the assumption that second half sales will be the same as first half sales, giving a you a projected 2M annual BEV estimate. You are assuming no acceleration in BEV growth so you shouldn’t be surprised that you don’t see one. Real world numbers suggest there is an acceleration. In August, BEV market share in the EU broke the 20% mark, a new record. That will likely continue through Q3 and Q4 unless Tesla production cannot keep up.

In August 2023 , EU battery-electric car registrations surged by 118.1%, reaching 165,165 units, accounting for 21% of the market. Except for Malta (-22.6%), all EU markets saw double- and triple-digit percentage growth, with Germany, the largest market by volume, growing by a remarkable 170.7%. New car registrations: +21% in August; battery electric exceeds 20% share for the first time - ACEA - European Automobile Manufacturers' Association.

Worth repeating that Germany in August saw 170% BEV volume growth! Yet VW feels demand for its BEVs is declining and is shutting down much of its domestic all-electric production. Go figure…


Now I know you are crazy.

Why would anyone want to talk to a lawyer in their spare time?

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Crazy like a fox.

Because he isn’t charging me 2000 dollars an hour. Seems like free money to me.


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Don’t stand in front of a mirror, the glare is far too much.

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I agree but then you can stand in front of a mirror all day long, the dull shine won’t even bother your eyes. :rofl: :rofl:


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I appreciate the links, because they make clear that the source of the discrepancy between our figures is, in fact, the distinction between the EU and Europe. Using their numbers, last year there were about1.53 million BEV’s sold in Europe, and about 1.1 million BEV’s sold in the EU - a big enough gap to account for the difference in our data.

A fair point - though August might be an anomaly given the expiration of Germany’s subsidies on September 1. Even so, four more months like August (just under 200K sales for all of Europe) would bring annual European (not EU) sales to under 2.1 million units and around a 33% growth rate. Better, but not all that far off from the 2 million I had guesstimated upthread.

A 33% growth rate (for Europe, not the EU) is a good, but not outstanding, year for BEV’s in a growing European car market (petrol car sales are up 13% for the year). It’s pretty close to what they had last year in a shrinking European car market. Which is, I think, why VW is saying the things they’re saying even though their BEV sales this year are pretty solid. Turning finally again to Tesla, these figures show that Tesla has about an 18% share of the European BEV market so far YTD - and while that will likely go up somewhat for the full year, it’s still a pretty clear indicator that the size of the European BEV market is determined by the volume of incumbents’ BEV production far more than Tesla’s.


The Tesla Model Y is the best selling vehicle of all types in the EU. By winning the competition against ICEs and hybrids, Tesla expanded the BEV market beyond a niche segment dependent on government mandates. Unfortunately, there aren’t nearly enough Teslas being produced to satisfy the demand created. This leaves an opening for other car manufacturers to take advantage of the demand. But make no mistake, this is a market driven by Tesla. The only thing limiting new BEV registrations in the EU is the availability of the BEVs most Europeans want, which are Teslas.

The sales of BEVs not named Tesla are very much influenced by incentives. That’s because subsidies are needed for OEMs to competitively price their BEVs (even then they still lose a ton of money selling all-electrics). Not so with Tesla. Tesla can lower car prices as incentives end and still make money. Plus the demand for Tesla models are much higher than for those of the OEMs.

That’s why Tesla is driving the BEV market. That market is primarily influenced by the availability of the Model Y and Model 3 and the prices they are being sold for. Doesn’t matter the country or the competition.

To put it another way, there are two primary factors driving the sales of BEVs in Europe. Incentives/mandates and Tesla.


Maybe true but Musk seems to be quite happy in China and the Chinese are quite happy to have Tesla in Shanghai. There is something mutually beneficial going on there.
You hear the Germans needing to respond to the Chinese EVs on the one hand and on the other hand VW expanding in China.
The picture seems more complex than the headlines.

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Immature, etc–agreed. However, the ONLY reason the Chinese are willing to deal with him is simple: They need what he offers. Not the cars but the large-scale manufacturing that allows it. THAT is what they so badly want to understand.


Again - maybe? It certainly seems like the automakers who are manufacturing more than 80% of the BEV’s being sold in Europe have a little something to do with it. It wasn’t only, or even primarily, Tesla that expanded the European BEV market from being niche. The market expanded from 0.35 million to 2 million between 2019 and now…but most of those units were not Teslas.

Which means the market decisions of the incumbent automakers matter. Consumer preferences for BEV’s vs. ICE’s (which have increased their absolute sales this year) matter. I mean, you can say that consumers are motivated to buy 1.7 million incumbent BEV’s with a 25% subsidy only because of the subsidy, but buy 0.4 million Tesla BEV’s with a 25% subsidy because they love the cars…but there’s not a ton of support for that. People bought cars other than Toyota Corollas not because Toyotas were supply constrained, even though the Corolla was the highest-selling car.

And I think we’re now at the point where we have to examine the possibility that Tesla is no longer selling all that they could produce. Oh, sure, they’re selling all the capacity from their existing auto plants. But at that simple level, every automaker sells all the cars they can make using existing facilities. The amount that they make is determined by how many facilities they develop.

Tesla’s not a cash-starved start-up struggling to increase output with their one discount-purchase Fremont facility any more. They have ample access to capital, global management, and a CEO who is one of the most famous entrepreneurs on the planet - from now on (and for at least the last two years) they can buy and/or start building as many factories as they want.

Yet…only Monterey is far enough in the pipeline to warrant an announcement to the public. And it’s not expected to come online until 2026. Tesla will go at least two and a half years choosing not to open a new car factory, and possibly up to four years, during a time when they are ostensibly willing to slash prices to maximize output as fast as they can. They’re in preliminary talks with India and other countries, but are taking their time picking a site - and it’s not clear whether it will be an auto plant or for Powerwall energy storage.

The reality may be more prosaic - that Tesla’s reached the point that every other carmaker is at (and indeed almost every manufacturer). They have built out a certain production capacity, and while they absolutely have the capital to expand it to have larger production capacity, their sales are constrained by marginal consumer demand and they’d have to lower prices to clear product. And at some point, they choose not to lower their prices for the sake of expansion.

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Is it not the case that all of the gigafactories, i.e., everything but Fremont, has lots of space for internal expansion without building any new facilities?

Somewhat. Berlin and Austin are still ramping up, of course. They will continue to expand production in those factories over the next year - both Model Y and the Cybertruck (eventually) in Austin.

But not indefinitely. Berlin can go to about 500K cars in their existing facility. After that, they have to build more. Tesla has room - and plans - to build a second facility at Berlin, originally aiming to get the first phase open for early H2 2024 - but they haven’t been able to get their permits yet, so they probably can’t get that first phase of the new facility open until the end of 2024 (and that’s optimistic - it was a 25 month build out for the current facility from ground clearing permit to opening). They might get up to a million cars per year by fully building a second facility at Berlin, but they can’t get up to that run rate any time before 2026. And even when they do, they’re still going to have to keep growing at a fast rate for another 4 years based on their sales goals.

But btresist’s thesis is that Tesla can sell as many cars as they can build into the European market. That market is already at more than 3 million EV (2 million BEV) - nearly all of them being cars that are being purchased only because there aren’t Teslas to buy, in his framing. Which makes it puzzling that Tesla hasn’t yet identified a second site to build to the European market. They’re going to need significantly more than a million cars production capacity to serve that market in 2027. They probably can’t do that from their current holdings in Berlin.

Perhaps with a second facility at Shanghai? They’re trying to built another facility, but the government might not let them - they regard the Chinese market as oversupplied, and so have been hesitant to add more capacity. Nor is it clear that they would allow Tesla to add capacity to drive exports to Europe, since that’s something they’re prioritizing for their own domestics to capitalize on.

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Tesla is increasing market share in Europe while still being able to maintain profit margins per vehicle well above the industry average and well above its competitors. If one believes that price is determined by supply and demand, then this observation indicates that the demand for Teslas is substantially higher than the supply.

Tesla has larger ambitions. It aims to dominate the $25K auto market. To do this, it needs to revolutionize auto production to get the costs down with stuff like full-body gigacasting. That’s the ambitious goal of the Mexico gigafactory as well as the proposed objective of the India project.

From a financial POV I don’t see the urgency for Tesla to satisfy the demand for the Model Y or the refreshed Model 3. The high profit margins of both caused by scarcity provide funds for the development of the $25K “car for the masses” and Tesla’s version of the robotaxi. Tesla believes that both products will provide far more bang for the buck than another gigafactory making Model Ys. I think that is probably correct.

Getting back to VW. I think CEO Blume concluded that the German-made VW BEVs (ID3-4) cannot compete with Tesla. The price required to create demand for the ID3 and ID4 in the face of Tesla competition was losing the company too much money. That’s the softening of BEV demand observed by VW. The new plan is to have VW-branded BEVs made in China by Chinese companies that presumably will be able to do so in a cost-competitive way.


Curious, what release date for a mass market Tesla robotaxi would meet your expectations for a timely product delivery?

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Well, higher than the supply. Tesla’s operating margins have fallen to the point where they’re comparable to Toyota’s, at least in the most recent quarter - we’ll see where they are for Q3. But no one would describe access to Toyota vehicles as supply-constrained. It’s just that’s kind of where a well-run automaker lands in terms of margin.

Either way, they need production capacity to meet their ostensible sales goal. Whether they’re making 2.5 million more Model Y or Model 2 in 2026 than this year, they’re still planning on making 2.5 million more vehicles. That extra capacity isn’t coming out of Monterey.

Granted, I don’t think they seriously intend to meet that growth rate. Their YoY growth rate will probably fall below 25% in Q4…and obviously the Cybertruck isn’t coming to market timely. The supposed $25K car still hasn’t been unveiled, and Monterey isn’t likely to start producing cars for customer delivery now until end of 2025 or 2026. But still - if they plan to stick to it, they’ll need a lot more capacity than they have today - whether the Model Y or the $25K car.

Before anyone else, and better than anyone else. Musk has been pretty explicit that the high valuation of Tesla is dependent on autonomous driving. Investing in Tesla means believing this has a possibility of happening. Whether it happens in two years, or five, or even ten I don’t think matters much as long as Tesla gets their first or not long after but with a substantially better product.

I will say though that IMO, a successful robotaxi is not essential for Tesla to justify its current valuation. My belief is that its BEV production and business models are superior to its competitors, which means the OEMs will never catch up.

Toyota’s operating margin rose in Q2 as their days inventory declined to 30 days. The Industry norm is about 50 days. Due probably to pandemic shortages the supply of Japanese cars are unusually low this year. This means that Toyota is currently supply constrained relative to industry norms, hence their high operating margins.

Another indication that Tesla sales are constrained by supply, not demand. The Cybertruck currently has 2M orders, a 5-year backlog. For Tesla, demand isn’t the problem, it is supply. Tesla has needed more production capacity since its inception, this isn’t anything new. It has rarely if ever been able to meet the demand for its products.

Tesla’s problem and also its advantage is that it isn’t interested in simply duplicating the Shanghai or Berlin gigafactories. Each reiteration attempts to be a substantially improved version of the preceding plant. This constant technological evolution means that time tables are only estimates at best but also that the competition will have a very difficult time catching up. The TX gigafactory is optimized for the cybertruck and is different from Shanghai and Berlin. The Mexico plant will be optimized for the next generation vehicle. The batteries for each vehicle are changing as that technology advances. For Tesla it is all a very dynamic process. These cause delays, but make for a better product.

In short, what differentiates Tesla from the OEMs is the willingness to make major changes in real time even if it disrupts schedules. This is more the behavior a tech company than a traditional manufacturing concern.


Toyota’s current operating margin isn’t at their all time high, and they’ve pretty consistently been within about a point of it (up or down) for the last decade or so. Tesla’s margins have fallen down to that of a typical, not supply-constrained, year for Toyota.

Which doesn’t really scream out that Tesla’s all that supply-constrained. Especially when you consider that their products are subsidized to the tune of maybe seven or eight percentage points (much higher in the U.S., around that in China, and somewhat less in Europe). Which would be nearly all their operating margin, these days. But we’ll have to see where that ends up - one quarter does not a trend make, and perhaps their margins will return back to being unusually high.

BTW - all products in every industry by every manufacturer are supply constrained. No one builds enough capacity so that their market-clearing price to sell all their production yields a zero margin - they always set their prices and output to get at least some return on their capital. Once Tesla’s built out all the production capacity they need to fill supply at the price they’re willing to sell their cars to get a decent margin, they’ll stop adding production capacity. But that won’t be anything unusual.

Does it? I didn’t think they were taking orders yet - they don’t even have a price set on the truck. I know they do have is 2M refundable $100 reservations, that customers can convert into actual orders some day. But I think that’s something different. I expect Tesla will have to actually reveal the final product and set a price before we see what percentage of those reservations actually convert to orders.

I mean, I don’t think that’s really true. As quoted upthread, Tesla has applied to build a new facility in Shanghai to build more Model Y’s. They’ve applied to build a new factory in Berlin to build more Model Y’s as well. They’re just not applying for enough new capacity at a fast enough rate to keep up with the BEV revolution if it’s happening as fast as you say in Europe, or to keep up with their projections for future sales growth.

And it better not be true, or Tesla’s sales growth is going to come to a screeching halt. Monterey probably won’t be delivering six-figure annual sales until 2027 (it’s generally taken Tesla about three years to permit, build, and then ramp up production of a new plant to 100-200K). Tesla plans to sell 4 million cars that year. It can’t possibly do that with just the plants it has now plus Monterey. They have to add a ton of Model Y capacity or all their sales projections are pure fiction.

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You have to look at the totality of the data. Tesla finally produced enough vehicles in 2023 that they were able to cut prices to increase marketshare in the major markets. They were even successful in the cutthroat China market, almost doubling their market share in August through increased production from Shanghai. In contrast, Toyota has suffered significant declines in sales in China, along with all the rest of the Western OEMs.

Tesla has demonstrated that it can increase market share at will in virtually all the major car markets if it has sufficient supply.

If a company has to lose money to sell its inventory then it is not supply constrained. Just the opposite. How much money is GM and Ford losing on every one of the BEV sales?

No one intends to. But over supply happens all the time. It is why businesses go out of business and CEOs get replaced.

If supply is less than expected, Tesla will be priced higher than expected. The demand isn’t going to disappear.

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