EV Market Share

[adiggs]

View attachment 341653

Thinking about market share and more accurately, the moat that Tesla does or doesn't have, this is the view that I prefer keeping track of. Revenue share is of course important, as is unit share.

Share of delivered battery is, for me, the most indicative of moat (or absence thereof). This is the chart where we'll see who the 2nd serious BEV manufacturer is. I admit to a little bit of surprise at Bolt being nearly 2x Leaf.

 

[FlatSix911]

According to Electrek... Tesla outsold Mercedes-Benz in the US last quarter, reports says

Atherton Research estimates that Tesla sold 69,925 Model 3, S and X vehicles in the US last quarter out of the 83,000 vehicles it delivered worldwide. In comparison, Mercedes-Benz sold 66,542 passenger vehicles, excluding commercial vans (Freightliner, Metris, and Sprinter), in the US during the same period.

 

[jhm]

It's curious to me how quickly the Model 3 has shifted the discussion from Tesla's share of the EV market to Tesla's share of the US auto market.

Meanwhile this:
Bloomberg - Are you a robot?

“I’d rather be last in and get it right,” said Doll, Subaru’s U.S. chief, “than be first in and destroy my brand image and reputation.”

The juxtaposition here in my mind highlights how Subaru is still framing EVs as something other than a car. The fact is Subaru has no product of any drivetrain that competes in volume with the Model 3. It's not just that they are hanging back on EVs, they are hanging back on bringing any competitive product to the market. This is not a strategy. This is fatalism.

 

[RobStark]

It's curious to me how quickly the Model 3 has shifted the discussion from Tesla's share of the EV market to Tesla's share of the US auto market.

Meanwhile this:
Bloomberg - Are you a robot?



The juxtaposition here in my mind highlights how Subaru is still framing EVs as something other than a car. The fact is Subaru has no product of any drivetrain that competes in volume with the Model 3. It's not just that they are hanging back on EVs, they are hanging back on bringing any competitive product to the market. This is not a strategy. This is fatalism.

This is Subaru's US market share, their largest market. Bigger than Japan.

From the POV of Subaru executives CARB EV mandates are just an annoyance.

 

[jhm]

This is Subaru's US market share, their largest market. Bigger than Japan.

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From the POV of Subaru executives CARB EV mandates are just an annoyance.

Thanks. That is actually pretty good growth, 14% CAGR over the last 5 years. Mandates are always an annoyance, but more than annoyance will be when Subaru owners start converting to Tesla.

It could be happening already. US Subaru sales are up y/y only 5.13% YTD and 3.49% for September. So Subaru does seem to be off their 14% growth game for whatever set of reasons. They still have small enough market share that they can grow substantially faster than the market as a whole. The more telling sign of losing competitiveness is when they stop growing market share. It will be interesting to see how that plays out over this year and the next.

U.S. Auto Sales Brand Rankings – September 2018 YTD | GCBC

 

[RobStark]

Thanks. That is actually pretty good growth, 14% CAGR over the last 5 years. Mandates are always an annoyance, but more than annoyance will be when Subaru owners start converting to Tesla.

It could be happening already. US Subaru sales are up y/y only 5.13% YTD and 3.49% for September. So Subaru does seem to be off their 14% growth game for whatever set of reasons. They still have small enough market share that they can grow substantially faster than the market as a whole. The more telling sign of losing competitiveness is when they stop growing market share. It will be interesting to see how that plays out over this year and the next.

U.S. Auto Sales Brand Rankings – September 2018 YTD | GCBC

Subaru is budding up against capacity.

Subaru doesn't believe they will lose Subaristas to Tesla.

They have not taken the large step to build a new factory.

Which is a much bigger decision than for Toyota or GM, as a percentage of overall capacity. They currently only have two.

Mandates have been an aid to Toyota and Nissan to grow in California. And headwinds for GM and Ford.

Until now hybrids got partial ZEV credits.

 

[jhm]

EV Sales: Global Sales By OEM

YTD Sept 2018, Tesla is now #1 OEM of EVs, 12% share of all plug-in vehicles, 18% share of BEVs (PHEVs excluded).

So Tesla is really close to 20% share of EVs. Now if they can just hold onto that 20% for next 12 years, they'll walk away with about a fifth of the auto market.

 

[jhm]

2018 full year results are coming soon. But as of Nov, global plug-in sales were just 272k shy of 2M for 2018 total. Nov sales were at 238k, so certainly 272k is within reach.

Global November Sales: New Record Of Over 237,000 Electric Cars

EV penetration of total market should exceed 2.0% for year 2018. Adding 2M to the light EV fleet of 3.1M as of end of 2017 makes for 64.5% growth in 2018. Continuing at nearly this rate puts 5% EV penetration within reach by 2020.

Note also that BYD and BAIC are fighting hard to get back into the #1 and #2 global EV positions. BYD beat out Tesla for #1 in Nov, while Tesla is beating out BYD for YTD #1. BAIC EC series is likely to become the #2 best selling EV after Tesla Model 3, but beating out Nissan Leaf. So Tesla should end the year with nearly 12% of the plug-in market, with BYD at 11% and BAIC at 8%.

If Tesla can ramp to 1M sales in 2020, it should capture more than 20% share of the EV market and 1% of the total auto market. This looks quite ambitious, but just to maintain a 12% share of EV market, Tesla will need to able to deliver more than 600k in 2020. So just ramping Model 3 to 500k and holding Models S/X at 100k gets to this 600k level. It is clear that we need GF3 and Model Y to progress nicely in 2019 just to have upside in EV market share in 2020 or to sustain 12% market share into 2022.

 

[jhm]

Shorting Oil, Hedging Tesla

Here I argue that ICE sales have likely peaked in the US in 2018.

 

[jhm]

Charged

See my response here.
Colin Mckerracher on Twitter

This analysis attempts to survey what automakers will invest over the next ten years on plug-in vehicles. $300B may seem like a big number, but their methodology is pretty shoddy. Note that they estimate that Tesla will invest just $10B. That is a huge understatement.

Here's my rough conservative estimate.

2019 R&D $1.68B, growth 20%/y, ten years $44B.

2019 capital expenditure $4B, growth 40%/y, ten years $279B.

So over next ten years, Tesla easily invests more than $320B all by itself.

The rest of the auto industry must invest well more than $300B just to maintain its market share of the entire auto industry.

There are of course other analytical lines of attack that suggest much higher investment levels. For examples, consider that about 10,000 GWh of annual gigafactory capacity is needed to satisfy the entire auto industry with batteries with about 100M vehicles per year. Just the factory cost for 1 GWh/y capacity is in a neighborhood of $50M to $100M. So the cost for 10,000GWh capacity is $500B to $1T. Of course, not all automakers will invest in their own battery factories, but that just means they will pay for it in a high battery pack cost.

Competitive EV makers must also tool up for building electric drive units, power equipment, and other elements specific to an EV drivetrain. So Tesla's Shanghai factory may give us a fair estimate of total capacity costs. Specifically, $5B for 500k/yr EV capacity implies $10B per 1M car. For a market of 100M vehicles, we get to $1T investment for the whole industry. Natural most OEMs have factories that could be retooled for EVs, but the raw floor space is only a small fraction of the cost of capacity; tooling is easily 80% or more of the cost. So even trying to salvage some value out of ICE plants, we are still looking at total manufacturing capacity cost around $1T.

The above does not even include things like R&D for new EV models and charging, sales and service infrastructure that competitive EV makers will invest in. So I think the whole automotive industry needs to be thinking about an aggregate investment well in excess of $1T. Let's suppose that the full investment is $1.6T. Tesla looks good to put up $320B in the next 10 years. Thus, Tesla could make 20% of the total investment. This suggests that Tesla may well end up with 20% market share of total automotive revenues from building batteries and cars to charging and servicing them. Now if other OEMs only pony up $300M, this still leaves about 60% of the EV industry up for grabs. So either OEMs will burn a lot more cash than $300B over the next 10 years or Tesla and other new entrants will step in to grab a bigger peice of the pie. It's looking like Tesla could continue to grab significant market share after 2030. The only practical way for competitors to stop Tesla from grabbing more market share is to push the auto market quickly to 100% EVs. But investing just $300B (and a lot of that is diverted to plug-in hybrids) along with $320B from Tesla will not get to 100% BEVs by 2030, maybe not even 50%. So that leaves a lot of upside for Tesla to keep taking share past 2030.

Either put up the cash or lose market share.

 

[adiggs]

...

Either put up the cash or lose market share.

A devil's dilemma - put up the cash or lose market share. Do they have the cash to put up, or will attempting to put up the cash put them into a bankruptcy spiral before the investment creates income to pay for itself.

 

[jhm]

A devil's dilemma - put up the cash or lose market share. Do they have the cash to put up, or will attempting to put up the cash put them into a bankruptcy spiral before the investment creates income to pay for itself.

Interesting question. I dug into GM a bit to ask this question. First, GM sold 9.6M vehicles worldwide in 2017, 10.2% market share. So by my guestimates above, to hang on to 10% market share GM needs to invest $100B to $160B over the next ten years. Since this business is at steady state in terms of overall growth, lets say $10B to $16B per year for ten years.

So does GM have enough cash flow to fund that level of capital spending on EVs? Well, for the last two years, GM's capital expenditure has been about $8.5B, and this is below depreciation which was $12.3B in 2017 and $9.8B in 2016. GM does not seem to be replacing depreciated assets with fresh capital spending, and it is also in decline in unit sales and revenue. Net income is unreliable, loss of ($3.9B) in 2017 and gain of $9.4B in 2016. The forward P/E of 5.54 implies an expected $9.5B in net income for 2019, but also the dividend will cost about $2.27B. So even if GM could count on stable $9.5B earnings each year, after payout of dividends this retains just $7.2B.

It seems that GM would be hard pressed to invest more than $8.5M each year. If it were to invest all capital expenditures into EVs, it would struggle to maintain earnings until it had a real break-through product like the Model 3. So to spend $8.5B on EVs, it may need to suspend cut the dividend and raise capital. I don't have a detailed enough understanding of GM finances to know how little capex they can spend on the ICE business to ramp it down as quickly as the EV business ramps up. So I'm thinking it would be a stretch for GM to invest $8B per year in EVs. At that level of investment, I doubt GM could preserve a 10% market share. Maybe it declines to 5% to 8%.

Does anyone have a better idea how GM could finance growing its EV business to 10M EVs per year by 2030? Can they keep their $2.3B annual dividend while burning through about $2.5B per quarter? Without the dividend would the share price hold enough value to raise needed capital? Any ideas?

 

[FlatSix911]

From Inside Evs... The Tesla Model 3 Is Truly A Dominant Force, According To J.D. Power

 

[renim]

....

Does anyone have a better idea how GM could finance growing its EV business to 10M EVs per year by 2030? ... Any ideas?

Carlos Ghosn's 2 business give some options.

Initial phase (ie LEAF gen 1, Renault Fluence etc) was a 4 billion euro ($5 billion USD then) investment,
Nissan went inhouse, spent 3 billion euro for the LEAF (inhouse cell manufacture, inhouse motor, inhouse magnets, inhouse controllers etc)
Renault outsourced, spent 1 billion euro (about 965 million euro from memory) for the Fluence (sedan), Zoe (hatch), Twizy (airbag in a quad) and Kangoo (work van). which roughly covered the entire range of Renault's offering. so for a 1/3 less money, Renault bought 4x the variety of Nissan - roughly an order of magnitude less capital.

2 differing strategies, 1 CEO.

after a false spy scandal, that 2IC from Renault departed to lead VW electrification efforts.

Electric motors can be very commodity, much more so than ICE
li ion cells can be very commodity
electric controllers not as much commodity, but still at Chinese scale

there is a simple way for GM finance growing EVs to 10M per year. Do it in China, with expat and Chinese expertise...

 

[RobStark]

.

Does anyone have a better idea how GM could finance growing its EV business to 10M EVs per year by 2030?

I can tell you GM is seriously cutting back on its ICE business and the needed capital to fund it. It is closing 4 US factories plus 1 Canadian, not withstanding a possible UAW strike to stop it.

It is pulling out of non-profitable markets ASAP. GM was a global company that bragged about market share. Now, GM is largely a Sino-American company laser focused on profitability and maybe the transition to an autonomous EV future.

GM sold their European Business Vuaxhall and Opel. GM now just sells a few thousand Cadillacs,Camaros, and Corvettes per year in Europe-Russia as a placeholder.

GM pulled out of the Indian market. They kept one small factory that is subsidized and manufactures for export.

GM pulled out of South Africa and the Southern Africa region.

GM pulled out of Indonesia.

GM is receiving $4.5B in subsidies over 10 years to remain in South Korea. While the South Korean government used to back Hyundia-Kia to the max as the national champion it is now worried about competition in the domestic market.

GM may follow Ford soon and pull out of Japan.

GM slashed about half their sedan offerings in the US and is no longer funding next generation of those.

Interestingly, GM says there will be no electric pickup for at least 20 years but revealed recently it plans a Cadillac Electric 7 Passenger full size SUV. Remove the third row and the roof above and you have an electric pickup.

 

[mongo]

Interestingly, GM says there will be no electric pickup for at least 20 years but revealed recently it plans a Cadillac Electric 7 Passenger full size SUV. Remove the third row and the roof above and you have an electric pickup.

Interesting point. The Escalade is 7 person, body on frame, with 5k towing (8k+ with weight distribution hitch).
Use a lumpy battery pack to avoid frame changes?

 

[renim]

BYD NEV sales in 2018 exceed 240,000 units

Byd new energy vehicle sales 2018 were 247k.
December 2018 were 46k.

 

[RobStark]

Interesting point. The Escalade is 7 person, body on frame, with 5k towing (8k+ with weight distribution hitch).
Use a lumpy battery pack to avoid frame changes?

No, the whole point is Cadillac(GM) will be doing ground up BEV designs.

No compromised Bolts "with everything and the kitchen sink thrown into the 'engine bay' " or CT6 PHEVs with battery packs thrown into the trunk.

Proper BEV Frunks from now on.

 

[mongo]

No, the whole point is Cadillac(GM) will be doing ground up BEV designs.

No compromised Bolts "with everything and the kitchen sink thrown into the 'engine bay' " or CT6 PHEVs with battery packs thrown into the trunk.

Proper BEV Frunks from now on.

In that case, I'm not sure an SUV would be convertible to a truck, unless specifically built to be a truck with an SUV body. An electric SUV design can use the rear roof and sides for strength, but a truck can't. So it seems like an SUV that can be a truck would be a compromise in performance/ weight/ range to a pure SUV.

 

[RobStark]

In that case, I'm not sure an SUV would be convertible to a truck, unless specifically built to be a truck with an SUV body. An electric SUV design can use the rear roof and sides for strength, but a truck can't. So it seems like an SUV that can be a truck would be a compromise in performance/ weight/ range to a pure SUV.

The numnutz at Reuters may be using the term SUV/CUV interchangeably but an SUV by proper definition is body on frame.

Rivian is showing the way with a skateboard body on frame design.

If GM makes a dumbass design much worse that a startup has already demonstrated that is just willful ignorance on their part.

There is no need to make the Cadillac Jumbo SUV a unibody CUV. Cadillac customers will not care about 75 MPGe or 80 MPGe. They will care about towing and payload capacity, if for no other reason bragging rights.