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The demand for electric vehicles has moderated, especially when compared with the subsidies-driven boom period of the early 2020s. Now, however, as those subsidies are being rationalized, the media in general is failing to properly contextualize the resulting market distortions, thereby, painting an an overly depressing picture for the EV landscape. For those who are bullish on this nascent sector, look no further than China where Tesla is all set to record its best quarter yet despite soaring competition from local players.
Today, the media landscape is littered with headlines that EV sales in German crashed by 69 percent year-over-year in August. Even Bloomberg's post is titled: "Europe’s EV Sales Plunge Has Carmakers Seeking EU Relief."
This perfunctory take, however, ignores the market-distorting behavior of state subsidies. As explained in detail by a Tesla-focused analyst in this X post, German EV sales for August 2023 were artificially inflated by the then-imminent end of very lucrative subsidies for commercial electric vehicles, which played a critical role in pulling forward demand from the latter months.
To account for this distortion, especially for analytical purposes, serious analysts will generally discount the one-time surge in Germany's EV sales in August 2023, leading to a more accurate discernment of secular demand for EVs.
Of course, European carmakers have leveraged this distortionary take to call upon Brussels to take "urgent relief measures," including a possible relaxation in stringent emission rules that take effect in 2025. This relaxation might also prompt Brussels to double-down on its EV-first policy by unleashing another wave of generous subsidies, to the benefit of these carmakers.
$TSLA China posted another strong 15.6K insured registrations for the week of Sept 9-15. After 11 weeks, with 2 weeks left in the quarter, TSLA China 3Q registrations are on track for their best quarter ever, and are +20% YoY and +26% QoQ. Source: @Tslachan @piloly pic.twitter.com/cHuuYv97gp
— Gary Black (@garyblack00) September 19, 2024
Meanwhile, to get an accurate reading of the secular demand for EVs, consider the fact that Tesla is on course to record its best quarter yet in China, courtesy of another strong weekly registration reading. More striking still, Tesla is posting these record numbers despite facing stiff competition from local competitors, including its nemesis of sorts BYD.
As another positive development, all Tesla bulls are currently eyeing the 10th of October with visible enthusiasm, when the much-anticipated Tesla robotaxi is slated for a formal unveiling. The latest addition to Tesla's product portfolio is expected to share the same platform that the EV giant intends to leverage for rolling out its cheaper sub-$30,000 Model 2. Bear in mind that Deutsche Bank now sees Tesla's fleet of robotaxis swelling to 1 million units by 2035, resulting in annual revenues of around $15 billion.
