Morgan Stanley’s Jonas: Tesla To Surpass GM, Ford US Market Share

[MEDICALJMP]

Morgan Stanley’s Jonas: Tesla To Surpass GM, Ford US Market Share
The analyst also predicts that Tesla’s revenue could surpass GM and Ford combined by 2027.

Feb 04, 2022 at 3:43am ET
14
By: Andrei Nedelea


Tesla has taken the automotive industry by storm and it has forced important changes that OEMs probably would not have made on their own. But it looks like the changes they’ve made and will keep making in the near future are not enough to maintain their sales lead over Tesla and now analysts are predicting the likes of GM and Ford will have a lower market share within the next few years.


The prediction comes from known Morgan Stanley analyst, Adam Jonas, who expects Tesla’s US market share to grow to 18 percent, compared to GM’s 12 percent and Ford’s 10 percent by the year 2030. Today, GM’s share is 14 percent, Ford has 12.5 percent and Tesla 3.5 percent, but Tesla’s share is continuing to grow, even in spite of the shrinking market, the pandemic and the ongoing chip shortage.

Jonas also predicts that Tesla’s US market share will hit 10 percent by 2026 or 2027. GM’s share is expected to drop to 14 percent or less by then, before it will drop to 12 percent in 2030. Ford’s share is expected to dip even lower by 2030, to just over 10 percent.

However, even though Tesla’s market share won’t surpass that of Ford or GM by 2027, Jonas predicts that the EV manufacturer’s revenue will be larger than their combined earnings and that this trend should become obvious in the next two years.

Tesla recently surpassed BMW for total sales volume in the US, selling 16,000 more vehicles (regardless of power source) than the Bavarians (352,471 sales versus 336,644 sales). It also sold more vehicles than Lexus (304,476 cars sold in the US) and Mercedes-Benz (276,102 sales).

https://insideevs.com/news/565234/adam-jonas-tesla-overtake-gm/

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[Ogre]

Market share numbers are over-rated. Tesla is going to crush the rest of the industry on profitability well before their units shipped catches the rest.

If anything the below chart understates the advantage Tesla has since this includes ICE vehicles. Legacy auto makers have even worse margins on their EVs.



It’s a vicious cycle. That money gets re-invested into engineering, better facilities, more vertical integration, better access to resources.

 

[SwampNut]

GROSS margin numbers are over-rated. Tesla is hiding a lot of costs that other manufacturers don't have, like operating their own dealer network. So yeah, the "profit" is higher because dealers don't get their cut, but there's still an operating cost.

 

[CyberGus]

"We expect Tesla's market share to drop from about 70% in EVs to about 20% in the next three years. They [Ford and General Motors] are gaining the bulk of the market share we expect Tesla to lose," said Bank of America auto analyst John Murphy on Yahoo Finance Live.

https://finance.yahoo.com/news/teslas-market-share-is-at-risk-of-plunging-analyst-184043294.html

I've no doubt that other automakers will increase their market share at Tesla's expense, but they currently can't produce EVs fast enough to overtake the market.

 

[SwampNut]

Market SHARE. The total EV market is growing astronomically. They will gain percentage, without an actual loss of numbers for Tesla.

 

[Ogre]

GROSS margin numbers are over-rated. Tesla is hiding a lot of costs that other manufacturers don't have, like operating their own dealer network. So yeah, the "profit" is higher because dealers don't get their cut, but there's still an operating cost.

Tesla’s operating margins are higher too. More than double that of GM and Ford.

That includes the cost of their dealer network, Supercharger build out, factory depreciation, interest on loans, etc etc etc.

Speaking of which. What Tesla doesn’t have is tens of billions in debt which Ford and GM have to service.

 

[Ogre]

"We expect Tesla's market share to drop from about 70% in EVs to about 20% in the next three years. They [Ford and General Motors] are gaining the bulk of the market share we expect Tesla to lose," said Bank of America auto analyst John Murphy on Yahoo Finance Live.

https://finance.yahoo.com/news/teslas-market-share-is-at-risk-of-plunging-analyst-184043294.html

I've no doubt that other automakers will increase their market share at Tesla's expense, but they currently can't produce EVs fast enough to overtake the market.

That’s nonsense (the article). They are not growing at Tesla’s expense. They are displacing ICE vehicles.

There is no “EV” market, every EV sold is an ICE vehicle which is not sold. The two are joined at the hip.

There is an automobile/ truck market. Tesla‘s share of that market is growing fast.

 

[CyberGus]

That’s nonsense (the article). They are not growing at Tesla’s expense. They are displacing ICE vehicles.

There is no “EV” market, every EV sold is an ICE vehicle which is not sold. The two are joined at the hip.

There is an automobile/ truck market. Tesla‘s share of that market is growing fast.

Well, Tesla's share of the auto market will increase, but their share of the "EV Market" will decrease as more entrants appear. Obviously Tesla can increase their deliveries while losing "market share" of an expanding market.

The BoA analyst is clearly trying to put a negative spin on Tesla. I am shocked, shocked

 

[SwampNut]

There is no “EV” market, every EV sold is an ICE vehicle which is not sold. The two are joined at the hip.

I know two people with an EV that is an add-on and they kept an ICE vehicle too. EV for short daily trips, ICE for long trips. I don't know how common that is, but I think is indeed a market for them in addition, not instead of. A company that is probably poised for that is Solo.

 

[Ogre]

Well, Tesla's share of the auto market will increase, but their share of the "EV Market" will decrease as more entrants appear. Obviously Tesla can increase their deliveries while losing "market share" of an expanding market.

The BoA analyst is clearly trying to put a negative spin on Tesla. I am shocked, shocked

You would see this same sort of market space jiggery when Apple was quietly taking over the cell phone industry. Every year some new Android entrant would crop up and Apple would “Lose Market Share” Even as it was increasing sales 30-40%/ year.

When there is a paradigm shift, a new “Market” opens up and it’s like a vast green field with all the player scrambling to stake out their territory. Legacy makers are scrambling to maintain their previous dominance and willing to lose money for some time to maintain it. New capital is flooding in and new companies can spend money freely to establish themselves.

The big question which none of these articles or analysts look at or bother questioning is: “Who is actually making money in all of this?”

It doesn’t matter how big a patch you stake out today, if you can’t figure out how to manufacture EVs at a profit, at a competitive price, your little patch of green will dry up and die.

 

[SwampNut]

You would see this same sort of market space jiggery when Apple was quietly taking over the cell phone industry. Every year some new Android entrant would crop up and Apple would “Lose Market Share” Even as it was increasing sales 30-40%/ year.

Hah, great comparison. The anti-Apple nutters were a lot like the anti-Tesla people now. And while Android "share" has always been higher because it gets installed on junk $50 phones and even car radios or thermostats, that's extremely low profit for Google or zero profit.

 

[Crissa]

Tesla was 2% of the vehicles sold in the US last year, but about 4% of the dollars spent.

-Crissa

 

[Ogre]

Hah, great comparison. The anti-Apple nutters were a lot like the anti-Tesla people now. And while Android "share" has always been higher because it gets installed on junk $50 phones and even car radios or thermostats, that's extremely low profit for Google or zero profit.

Tesla was 2% of the vehicles sold in the US last year, but about 4% of the dollars spent.

Linux is awesome, and enables a lot of awesome things to be built on top of it like Android and Tesla OS. It’s funny, I recall back in the day Linus Torvalds joking that Linux was going for world domination. It was amazing back then, but nobody expected what it has become.

Much like people under-estimate the leverage Apple was able to get by building software and hardware together, people under-estimate how much benefit Tesla’s integration brings to the table.

 

[SwampNut]

I'm a Linux system admin and my whole company and income is based on open source. But I have no time for that with things like phones and home automation, or cars--they need to just work.

 

[Ogre]

I'm a Linux system admin and my whole company and income is based on open source. But I have no time for that with things like phones and home automation, or cars--they need to just work.

Totally… I just got my nerd on a little there.

I own an iPhone which runs on Darwin (not Linux) because when I switched to a smart phone because Androids had huge issues with getting reliable, timely updates. Sort of stuck with it because it hasn’t bothered me.

I bought a Tesla because it’s rad. It does run Linux, but what I care about is the integration and features, not the OS. My inner nerd thinks its rad that it runs Linux, but I’d buy it in a heartbeat if it didn’t.

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