Tesla Shipping Cars From China To Europe — Consumer Demand Matter Or Simple Evolution?

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Stephen from the Solving The Money Problem channel on YouTube recently published a video titled “Tesla Dominating Competition in US & China (Europe Next).”

He mentions that Tesla just started shipping Model 3s produced in China to Europe. This presented the opportunity for some of Tesla’s critics (especially bears and short sellers) to come out of left field to share their thought that Tesla is running out of demand in China.

In his video, Stephen asked an important question. “So, if you were to take just a totally wild guess, where do you think it would be more economical to produce a Model 3? In China, paying Chinese wages with a localized supply chain sourcing most of its materials and parts from China, or Asia at least, versus making the equivalent vehicle in California paying California wages with a lot of the supply chain based in the US?”

He pointed out that his hunch was that it is more economical for Tesla to produce its Model 3s in China — by enormous margins.

« Tesla Autopilot gracefully avoided a road obstruction in China, revealing just how far the driver-assist system has come » : pic.twitter.com/Ec0sOiUYcY

— TESLA saves lives (@Teslasaveslives) February 12, 2020

Tesla Demand in US is Strong

One explanation for Tesla deciding to start shipping Model 3s from China to Europe may be that US demand is so high. Remember that Tesla is now producing the Model Y in California as well as the Model 3, and that limits Model 3 production capacity. If Tesla ships cars from China to Europe, it can deliver more US-produced vehicles to buyers in the US.

According to Good Car Bad Car, Tesla had a sales increase of 104.28% in September 2020 compared to September 2019. Last month, Tesla sold 47,036 vehicles in the US, according to their estimates, which is more than double what was sold in September 2019 (23,025).

“This tells you all you need to know about what’s going on — at least in the United States — at this point in time,” Stephen said in his video.

As CleanTechnica Director Zach Shahan recently wrote, Tesla stands out this year compared to the rest of the industry. US Tesla sales, according to our estimates, were up 22% in the 3rd quarter of 2020 compared to the same quarter of 2019, while the overall auto market was down 9%. In fact, Tesla’s result was second best in the industry.

In the first 3 quarters of the year overall, Tesla was slightly down, by 2%, but that was the best in the industry and clearly related to Tesla’s Fremont factory being shut down for a while due to the coronavirus pandemic.

The Detroit News also reported that very few automakers had profitable quarters following the coronavirus pandemic, but Tesla was one of these few, with second-quarter global sales rising up 2/5% over the first quarter. Further, its 3rd quarter sales were 44% higher in 2020 than in 2019. CleanTechnica also reported on that with our unique charts showing long-term Tesla vehicle sales growth.

“The way I sort of see Tesla stock, their market cap, and their current valuation is really based on the fact that there’s more visibility about what Tesla’s future looks like in terms of probabilities,” Stephen said. “The probabilities — the future looks very bright. We can see further out into the distance for Tesla than most other companies in the investment landscape.

“That’s why Tesla’s valuation is so insane at this point it time — because people can see more than one or two days in front of their feet. More than one or two quarters, more than one or two years. We can see a decade plus into the future and the future looks so incredibly bright. It’s a done deal. Tesla has won the decade and the market recognizes this.

“That’s why, at the moment, Tesla’s selling half a million vehicles per year but valued more than all the other automakers combined — because we can see so much further into the future and that future shows most other automakers are bankrupt by the end of the decade. And Tesla is dominating EVs, and energy, and plenty more.”

“In my opinion,” Stephen emphasized, “Tesla has won the decade, and it’s a matter of watching it play out.”