"I opened my conversation with Lee after seeing another set of numbers that showed how quickly Tesla's footing in China is eroding. Sales have fallen to a three year low and Tesla now holds only a single digit share of the Chinese EV market. With more than one hundred domestic EV manufacturers in China and BYD continuing to expand its reach, the competitive pressure on Tesla is intense."
"With the car business weakening, the stock's resilience depends heavily on the belief that Tesla will become an AI and robotics company. I told Lee that this pivot is difficult to evaluate because the evidence is thin. Tesla has prototypes but no mass produced robots and no broad robotaxi fleet. Meanwhile, companies like Waymo are operating autonomous vehicles on open highways, and each step forward they take highlights Tesla's lack of scale in the same category."
Tesla's sales in China have fallen to a three-year low and the company now holds only a single-digit share of the Chinese EV market amid competition from over one hundred domestic manufacturers and BYD expansion. China-based sales are declining even as exported vehicles perform relatively well. Several European markets report double-digit year-over-year declines, and U.S. market share fell from about 80% at its peak to 42% in the third quarter. The expiration of the federal tax credit is likely to reduce demand further. The company's resilience rests on a pivot to AI and robotics, but prototypes exist without mass-produced robots or a broad robotaxi fleet. Moving Tesla cash into xAI may help technology development but lacks a defined integration or revenue plan, and combining disparate businesses risks a conglomerate-style valuation discount.
Read at 24/7 Wall St.
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