1/ Sometimes I write an article that manages to obscure the main points. It happened today, when @SeekingAlpha published my latest collaboration with MaxedOutMama. Here, I'll explain how the conclusion should have read. Here's a link to the article.
seekingalpha.com/article/441626…
seekingalpha.com/article/441626…
2/ The key point I should have stressed is that $TSLA's return on investment in China is going to be far more modest than its fans (& analysts, & the biz media, but I repeat myself) believe. Indeed, China may become a capital drain. Why? Several reasons:
3/ First, China's NEV Plan requires sharing, collaboration, and standardization (of battery swapping, charging infrastructure, etc) that will remove some of Tesla's key advantages.
4/ Second, the luxury end of the Chinese EV market is now intensely competitive. Any further market share gains by Tesla will have to come in inexpensive cars along the lines of the Wuling Mini. Of which Tesla now has exactly none. Gucci needs to transform itself into Costco.
5/ Third, Starlink may have made Tesla radioactive to the Chinese. Not untouchable, but less lovable.
6/ Fourth, Tesla's FSD difficulties mean it needs to spend a lot more, rapidly, on making FSD real (which may not be possible, but it has to try). The brilliant video now circulating, which Tesla cultists are so eager to ban, reflects growing discontent with hollow promises...
7/ ... but in China, Tesla may have to have a separate FSD system, the one China is pushing hard to develop, which is consonant with its Surveillance State plans. Two entirely separate FSD systems mean extra cost.
8/ To meet its annual revenue requirements under the Grant Contract, Tesla will need lots of Shanghai exports by 2023. The NEV Plan all but assures that Tesla will need to be building two significantly different Shanghai variants for each model, one for domestic & one for export.
9/ Meanwhile, Tesla is beginning to invest in India. It needs to do that to create a separate, cheap supply chain. That investment will require billions, with a very, very long timeframe before any ROI can be expected.
10/ All this on top of the real, but unquantifiable, risks that the growing tensions between China and much of the West now pose.
11/ So, my apologies to MaxedOutMama. Her research was, as always, spot on. But this time, I made a botch of putting it all together.
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