In August 2023, Tesla reported sales of 84,159 electric vehicles in China. This is up 9.3% Y/Y. Lower prices are increasing Tesla’s competitive moat over other EV firms and domestic China EVs.
Tesla’s price cuts hurt competitors the most. They need to lower their price points. This decreases their revenue as input costs stay the same or increase. The negative profit margin could put them out of business. Expect Nio (NIO) and Xpev (XPEV) to struggle the most.
In the U.S., Polestar (PSNY) will struggle with its car offering. It does not have an EV truck to boost unit prices. Conversely, Tesla is rolling out its Cybertruck.
Rivian (RIVN) has a good chance of competing effectively against Tesla. It produced over 23,000 EVs and delivered more than 20,000.
Start-up Fisker (FSR) has serious scaling issues. It is selling EVs at an affordable price, which may increase demand. But if consumers cancel their booking, short-sellers will win. The short flat on FSR stock is 42.56%.
Luxury EV firm Lucid (LCID) will struggle the most. It overpaid its CEO, rewarding $379 million to CEO Peter Rawlinson. This is more than half of the $608.2 million in revenue reported in 2022. Lucid’s executives were quickly rewarded as shareholders suffered. Bears have an 8.7% short float on LCID stock.
