tesla-down-40-in-norway8217s-q4-63-of-which-explained-by-jaguar

Tesla Down 40% In Norway’s Q4, 63% Of Which Explained By Jaguar

As everyone watching the electric car industry knows, Norway is the undisputed “ground zero” for EV sales. Pure EVs (BEV, battery-electric vehicles) accounted for 41% of all car sales in Norway in November 2018, and plug-in hybrids (PHEVs) added another 16%, for a total of 57% of the market: EV Sales. No other country comes close.

As I am writing this, just before Midnight Norway time on Dec. 27, there are obviously a few short days left this quarter. It's impossible to say what residual sales are going to be in these final four days, but consider that what’s left beyond Friday is a weekend - when traditionally few new cars are registered in Norway and New Year’s Eve.

Looking at the daily registration statistics, very few electric cars are registered on weekends in Norway. Eyeballing the statistics I grab from this site - Registreringer av nye elbiler i Norge - every day, there are usually 300-400 EVs registered per weekday, but only 20-50 per day on a weekend. One senses that’s more of an administrative spillover than anything else.

Also, for Dec. 24, 25 and 26 almost zero EVs were registered in Norway, per the reference site cited above. The market awoke on Dec. 27 with 197 units registered on the day, when I took the temperature a bit after 9 p.m. local Norway time.

The point of the nuance described above is to say this: It doesn’t look like the remaining selling days in December will change the numbers you are about to see below, to any material extent. Obviously anything remains possible, including a big potential fleet sale in which an automaker could sell 200 or whatever cars to a rental car company, a taxi fleet, or something like that. We shall see whether that happens or not. But retail sales don’t look like they will move these numbers materially before the year ends.

Norway is an important market for Tesla (TSLA) for two reasons. To date since inception, Tesla has sold 19,812 Model S units and 11,147 Model X units. So that’s approximately 30,000 in total. This year, it sold 3,682 Model S and 4,946 units. That’s the first reason.

The second reason is that Norway is the bellwether market for electric cars. Other than just the 41% BEV market share discussed above, it's important for two other reasons:

  1. Unlike markets such as The Netherlands, there was no recent, and will be no imminent, major change in EV subsidies in Norway. Therefore, there have not been any - and will not be any in 2019 - major distortions in sales statistics, as people buy more or fewer EVs in advance on a change in subsidies. The Norwegian numbers therefore more accurately reflect real market trends.

  2. Because Norway is by far the leader in EV sales, it gets priority for new models coming to market. The public also is more educated on EVs, and has therefore become the worldwide EV trendsetter.

With all that said, let’s see how Tesla did in Norway’s Q4 (through Dec. 27) and compare with the prior year:

2018 Q4 Norway

2018 Oct

2018 Nov

Dec 1-27

2018 Q4

Q/Q change

2017 Oct

2017 Nov

2017 Dec

2017 Q4

1

Nissan LEAF

1629

1529

891

4049

162%

646

556

345

1547

2

VW eGolf

1145

1074

907

3126

32%

1235

488

649

2372

3

BMW i3

595

786

463

1844

31%

462

408

539

1409

4

Tesla Model X

123

250

980

1353

-34%

130

497

1430

2057

5

Renault Zoe

426

481

308

1215

84%

21

218

423

662

6

Hyundai Ioniq

292

587

330

1209

96%

176

246

194

616

7

Kia Soul

381

262

285

928

-22%

393

481

316

1190

8

Jaguar i-Pace

443

341

165

949

N/A

9

Tesla Model S

86

215

596

897

-47%

165

502

1033

1700

10

Hyundai Kona

54

134

176

364

N/A

TOTAL TOP 10

5174

5659

5101

15934

38%

3228

3396

4929

11553

Others (11-lower)

582

737

542

1861

25%

551

566

369

1486

TOTAL NORWAY

5756

6396

5643

17795

36%

3779

3962

5298

13039

TESLA TOTAL

209

465

1576

2250

-40%

295

999

2463

3757

Jaguar

443

341

165

949

N/A

Tesla loss

1507

Jaguar % of loss

63%

Source: Registreringer av nye elbiler i Norge

As you can see in the table above, here are the four main points you need to understand from this table, as it pertains to how Tesla lost market share to one car in particular:

  1. Tesla’s sales are down 40% this quarter, compared to Q4 a year ago. Obviously that number will shrink by perhaps at least 1% in the remaining days of December, but it probably won’t be a material number for all the reasons discussed above.

  2. This Tesla decline was 1,507 units (3,757 minus 2,250).

  3. Jaguar entered the market in the fall of 2018 (zero sales in 2017) and posted 949 units for the quarter to date.

  4. 949 units of Jaguar sales is 63% of Tesla’s decline (1,507) units.

Obviously nobody can say for sure that Tesla lost all of those 949 units to Jaguar (TTM). In fact, they probably didn’t. Some Tesla losses went to other EVs as well. However, I can make a good case as to why it’s probably a good assumption that Tesla lost these sales primarily to Jaguar.

The reason is simply this: Jaguar i-Pace is the only new car in the market in the same price and performance class as Tesla. All the other cars are far less expensive cars, with less horsepower and no all-wheel drive: Nissan (OTCPK:NSANY), Volkswagen (OTCPK:VLKAF), BMW (OTCPK:BMWYY), Renault (OTC:RNSDF), Kia (OTCPK:KIMTF) and Hyundai (OTCPK:HYMLF) - all of them, without exception.

In fact, when you consider the totality of the picture in Norway, Q4 was a total disaster for Tesla. The BEV market as a whole was up 36% (top 10 sellers were up 38%), but Tesla was down 40%. If that is not the definition of disaster, I don’t know what is.

Instead, the Jaguar i-Pace showed up and grabbed 5% of the entire Norwegian BEV market in Q4 - 949 units out of 17,795. This new market entrant - the first to go up directly against Tesla in the luxury BEV segment - posted a number that constituted 63% of Tesla’s reduction in sales.

Of course, as I said above, we can’t say for sure that Jaguar took this 5% market share from Tesla, but c’mon - this is about as clear a trace as one could possibly make it, without having photographic evidence and sworn statements by the people who bought the Jaguar. The fingerprints are very damning here, as I think should be obvious to anyone.

I could have waited almost a week to publish this article, and the final numbers will naturally shift these numbers by a hair. However, the value of this article is to a large extent that you are likely getting to almost 99% of the final answer, a few days early, given the sleepy holidays that remain this year.

The investment conclusion for Tesla here is this: When the first direct competitor showed up in the world’s most advanced electric car market, Tesla’s sales dropped 40%. If that’s the impact of the Jaguar i-Pace, then what do you think the impact will be when Audi (OTCPK:AUDVF) starts deliveries of the eTron in Q1 2019? By all accounts, Audi (OTCPK:VLKAF) is a far bigger brand than Jaguar in this part of Europe, including having more dealerships.

One final word about the Tesla Model 3: I know what you are going to say - the Model 3 is coming, and Tesla’s CEO has promised its arrival on European soil in February 2019. It obviously looks to become a strong seller among the electric cars. There is no question that it will help Tesla’s sales at that time.

However, keep in mind that there are two additional factors that kick into place in the first half of 2019 as well:

  1. If Tesla loses Model S and X sales to new competitors from Jaguar and Audi, it will take even more Model 3 units to make up for the lost margin on those more expensive vehicles.

  2. Audi and Jaguar won’t be the only new entrants in the market. In terms of less expensive cars, the Kia Niro and revised 230-mile range Kia Soul will enter the market in Q1 as well. Then, by June 2019, the Nissan LEAF with its new 230 mile range battery also will be in the market. Those will compete against Tesla Model 3 - not so much the Model S and X.

Conclusion: The Model 3 will help Tesla’s sales in Europe. However, the competitive wall is coming up fast, and it already had a huge impact in Q4.

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Disclosure: I am/we are short TSLA. I wrote this article myself, and it expresses my own opinions. I am not receiving compensation for it (other than from Seeking Alpha). I have no business relationship with any company whose stock is mentioned in this article.

Additional disclosure: At the time of submitting this article for publication, the author was short TSLA. However, positions can change at any time. The author regularly attends press conferences, new vehicle launches and equivalent, hosted by most major automakers.

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