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Tesla Demand Cliff Analysis, Courtesy Of A Frunkpuppy Lover (Graph)

Criticisms of Tesla actually haven’t changed much over time, especially in the deceivingly serious (or seriously deceiving) investment world. In the past 11 years or so, the same core talking points have been reused, recycled, and revisited in carousel-like cycles. Nonetheless, as one negative forecast is proven incorrect, another can sprout up.

Criticisms of Tesla actually haven’t changed much over time, especially in the deceivingly serious (or seriously deceiving) investment world. In the past 11 years or so, the same core talking points have been reused, recycled, and revisited in carousel-like cycles. Nonetheless, as one negative forecast is proven incorrect, another can sprout up. The critics can be primarily wrong for more than a decade (while the stock price increases 1100%), but as long as the cycle of specific criticisms is broad enough, many an analyst, investor, journalist, or consumer can think Tesla is doomed quarter after quarter, month after month, day after day.

Many people are fairly new to Tesla, just having learned about it in the past couple of years, and those of us who have been closely following the company for 7 years (or longer) easily forget how much context others are missing. While there are a handful of concerning patterns regarding Tesla “analysis” and forecasts, I think the biggest one concerns demand for Tesla vehicles. I’ll explain it like this:

  • When the first Tesla Roadster was hot and demand for the Tesla sports car was strong (relatively strong — for that car segment), critics claimed that Tesla 1) couldn’t build a compelling electric family sedan (or couldn’t build a family sedan at all) and 2) wouldn’t have much consumer demand for the vehicle anyway. (Who would want a large electric sedan?)
  • When the Tesla Model S came out, there was a waiting list of reservation holders. These people got their cars delivered more or less in the sequence that they pre-ordered them.
  • Sales of the Model S were considered to be fairly strong at launch, but critics claimed that demand would quickly fall off a cliff as the reservations were fulfilled. (There was little sense from critics that the car was so good that it would practically sell itself, and that many of those early owners would easily persuade several more people to buy the car.)
  • Quarter after quarter after quarter, year after year, critics/bears/short sellers claimed that, okay, demand didn’t collapse like they said, but next quarter it will. To be fair, even Tesla’s initial demand estimates were blown out of the water.

  • The Tesla Model X was the next Tesla in the lineup, and the same cycle occurred as with the Model S. There was a relatively long waiting list of reservation holders who gradually got their Tesla SUVs delivered, but as production ramped up, critics/bears/short sellers claimed demand for the X would drop off a cliff (because the SUV’s not normal, because it has falcon-wing doors, because it’s not as quick as the Model S, because blah blah blah). The critics/analysts were again wrong.
  • Quarter after quarter after quarter after quarter, the claim was that demand was starting to drop off for the Model S and Model X — and then it didn’t.
  • Then came the Tesla Model 3, which had a stunning number of reservations — hundreds of thousands within a few weeks. Clearly, this showed massive demand for the Model 3. Yet, critics/bears/short sellers took it to mean that once a few hundred thousand Model 3s were sold, consumer demand would drop off a cliff. No, Model 3 owners wouldn’t persuade 3–4 people to also buy a Model 3. No, the car has no compelling advantages that would stimulate ongoing demand from new customers as they learn about the 3. No, it is simply a cult phenomenon and only so many people will illogically join the cult and be interested in a Tesla Model 3.
  • Well, Model 3 demand has been blowing past the expectations of critics/bears/short sellers. Each quarter, when that becomes obvious, they jump to forecasts of the next quarter and hype up the never-ending vision of a steep demand cliff that suddenly kills Tesla — at last! The lesson is, be a bit thoughtful when seeing these claims — they can go on forever.

  • James Stephenson is a graph and chart lover who you must follow on Twitter — you are legally required to do so. He recently shared a great graph of just how much the Tesla Model 3 has been smearing the midsize luxury sedan competition in the US. The graph/tweet has been on our writer story list for a couple of days, but a response to it today from “Earl of Frunkpuppy” made me decide that I had to write up a quick article (this one). Just have a look:

Yes, that tweet made me actually laugh out loud. Many an expert claimed that Tesla Model 3 deliveries would collapse in 2019 because Tesla basically fulfilled its reservation backlog in 2018. Yet again, critics/bears/short sellers were wrong and Tesla Model 3 demand didn’t crash after reservation holders got their cars. Demand continues to rise as more and more people learn about the Model 3, sit in it, test drive it, crunch some numbers in comparison with a BMW 3 Series or even Toyota Camry or Honda Accord, and also find out that it doesn’t take years to receive a Model 3 after ordering one.

Yes, the world is burning and Apocalypse is arriving, but at least we have Earl of Frunkpuppy (and Elon Musk and James Stephenson) to lighten up our days and provide us with some priceless laughs. Here are a few more from Earl:

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Zach is tryin' to help society help itself one word at a time. He spends most of his time here on CleanTechnica as its director, chief editor, and CEO. Zach is recognized globally as an electric vehicle, solar energy, and energy storage expert. He has presented about cleantech at conferences in India, the UAE, Ukraine, Poland, Germany, the Netherlands, the USA, Canada, and Curaçao. Zach has long-term investments in Tesla [TSLA], NIO [NIO], Xpeng [XPEV], Ford [F], ChargePoint [CHPT], Amazon [AMZN], Piedmont Lithium [PLL], Lithium Americas [LAC], Albemarle Corporation [ALB], Nouveau Monde Graphite [NMGRF], Talon Metals [TLOFF], Arclight Clean Transition Corp [ACTC], and Starbucks [SBUX]. But he does not offer (explicitly or implicitly) investment advice of any sort.


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