More evidence about Tesla’s Big China Bonanza is coming in. It is data Elon Musk forgot, or refuses to share. At least not publicly with small investors. Yesterday, China-watcher JL Warren Capital issued a new research note to clients, providing background, amplification, and analysis to the bits and pieces of what became available over the weekend. In the note, JL Warren examines “the reasons for TSLA’s spectacular sales (measured in shipment, not profit) in China 2016.” The note provides insights into data intelligence normally not available to the average investor. It also triggers a few big questions. Like, why does Elon Musk think you are stupid?
The story about Tesla’s unexpected billion-dollar windfall in China kept Twitter aflutter all weekend. Tesla did not say how it made that money. Tesla does not release sales by region (except when it wants to), and the company would not comment on the persistent rumor that it sold a large block of cars to wholesalers in China. To get you the data Tesla won’t provide, I stuck heads together with the ultimate pros in automotive data, JATO Dynamics, and with the best analyst of the often wild and wooly China business, “Tiger Lady” Junheng Li of Warren Capital. With that, we finally know how many Tesla cars were shipped to China in 2016, and we have an idea how many were registered in China (it’s not the same number.) We also learn how Tesla managed to (not quite) make its 2016 guidance: It shipped boatloads of (cheap) Tesla cars to China.
To witness the launch of Toyota’s latest product, one with great impact far into the future of mobility, and maybe even of this planet, I went to Tokyo’s central bus depot this morning. I witnessed the reveal of Toyota’s latest hydrogen fuel cell vehicle. The one before, Toyota’s Mirai, would set you back $57,500 plus taxes, title, and delivery. This one you can have for around 2 bucks in Japanese money. Toyota’s new hydrogen fuel cell vehicle is a city bus, line 05-2, hop on at Tokyo Station.
“The challenge of reading large volumes of Tesla coverage is that it tends to be either rabidly positive or sharply negative,” writes the always insightful John Voelker in Green Car Reports. Indeed, Tesla reporting seems more at loggerheads than Breitbart and the New York Times. Looking for fact-based and sober reading material, I found some unexpectedly astute literature, explaining in great detail what can go wrong at Tesla Motors: It is the company’s annual report Form 10-K, filed with the SEC last week. Some say that Musk & Co. don’t know what they are getting into. Not true as a little reading will prove. Tesla knows exactly what can go wrong, and it is a lot.
Over the signatures of Elon Musk and CFO Jason Wheeler (who announced his sudden departure from Tesla a week before he signed the 10-K ) Tesla enumerates on 15 tightly-spaced pages the many obstacles standing in the way of Tesla’s success. There may be more “risks and uncertainties not currently known to us.” 10-K usually are dry reading. Tesla’s annual report is the Stephen King of SEC filings. Here are just a few highlights.
A few days ago, Bloomberg sifted through Tesla Motor’s Form 10-K, AKA the annual report filed with the U.S. Securities and Exchange Commission. In search of something good, Bloomberg found that “Tesla Inc.’s revenue from China last year tripled to more than $1 billion.” That headline whirled around the globe, and by now, the world is convinced that Tesla tripled the cars sold in China. Let’s see whether that perception jibes with reality.
I had a hand in establishing the “Golf Class” as a market segment in Europe: As a very young and very long-haired hippie copywriter, I worked on the car’s launch campaign in 1973. Now, to my unending sorrow, I must read that the Golf Class is damaged goods.
For decades, the top of the European bell curve sat smack in the middle of the “Golf Class,” AKA the “lower medium” market segment. (There are more market segments than segments of brie in Europe, prepare to be confused.) Underpinning Volkswagen’s dominance in Europe, the Golf class’s namesake, the Volkswagen Golf, still commands the biggest share. However, a reign that feels longer than that of Queen Elizabeth II is coming to an end. Small SUVs and crossovers are poised to unseat the Golf Class, much to the joy, and worries, of European automakers.
“This is BMW Group’s sixth-largest market, by volume.”
I consider where we are, and my jaw drops. We are in Tokyo, Japan, and we are talking to Peter Kronschnabl, President of BMW Group Japan. Would we be talking to President Trump, or to Ford, we would be told that Japan is closed to foreign cars. Kronschnabl finds the assertion literally laughable: I prod him where Japan ranks at BMW in terms of profits, and Kronschnabl just smiles.
“The Japanese customer wants a well-equipped car. No car is sold at list here.” At BMW, the global ranking goes China, U.S.A., Germany, UK, Italy, Japan, by volume. By profit, take out one country, which one is a company secret. This leads to a nice long chat, and in its course, I learn where the true barriers to entry are buried.
This morning, the expected happened: Serial CEO Carlos Ghosn handed the wheel of Nissan to Hiroto Saikawa, and said “You are in charge. This way, please.” As of April 1, the beginning of the new fiscal year in Japan, Saikawa will be sole CEO of Nissan. Ghosn will not step down, he will retain the loftier chairman job he long had. Actually, it looks like Ghosn might get comfortable with being a serial chairman.