Tesla’s EV Slide Deepens as Investors Shift Toward Musk’s AI Narrative

By Douglas A. McIntyre Published Nov 20, 7:27AM EST

Quick Read

Tesla’s (NASDAQ: TSLA) China sales have fallen to a three year low, leaving the company with single digit market share in the world’s largest EV market while domestic competitors such as BYD accelerate.
US and European weakness continues, with Tesla’s domestic market share dropping from 80 percent at its peak to 42 percent in the third quarter, and the expiration of the 7,500 dollar tax credit likely to pressure EV demand further.
Investor expectations now rely heavily on an AI and robotics pivot despite limited evidence of near term commercial readiness, creating uncertainty around Tesla’s long term valuation framework

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Tesla’s EV Slide Deepens as Investors Shift Toward Musk’s AI Narrative — © 24/7 Wall St

Watch the Video

I opened my conversation with Lee after seeing another set of numbers that showed how quickly Tesla’s footing in China is eroding. Sales have fallen to a three year low and Tesla now holds only a single digit share of the Chinese EV market. With more than one hundred domestic EV manufacturers in China and BYD continuing to expand its reach, the competitive pressure on Tesla is intense.

Weakness Across Global Markets

As we went deeper into the data, the trend extended across Europe and the United States. Exported vehicles from China performed relatively well, but China based sales sank. In Europe, several countries reported double digit year over year declines. In the United States, Tesla’s market share has dropped from around 80 percent at its peak to 42 percent in the third quarter. The expiration of the federal tax credit is likely to put more downward pressure on demand, not less.

The AI Pivot and the xAI Question

With the car business weakening, the stock’s resilience depends heavily on the belief that Tesla will become an AI and robotics company. I told Lee that this pivot is difficult to evaluate because the evidence is thin. Tesla has prototypes but no mass produced robots and no broad robotaxi fleet. Meanwhile, companies like Waymo are operating autonomous vehicles on open highways, and each step forward they take highlights Tesla’s lack of scale in the same category.

We also talked about Musk’s plan to have Tesla invest in xAI. Moving Tesla cash into a separate AI venture may help develop technology, but the strategic benefit to Tesla shareholders remains unclear without a defined product integration plan or revenue structure.

The Conglomerate Comparison

Lee and I touched on the idea of combining Tesla, SpaceX, xAI, the former Twitter platform and Starlink into a single publicly traded entity. The comparison reminded us of GE during the conglomerate era, when a collection of unrelated businesses traded at a discount because investors struggled to value the whole. Simplification usually creates value. Conglomerates rarely do.

Transcript:

[00:00:04] Lee Jackson: You know, Doug, I saw some new information and news coming out of Tesla (NASDAQ: TSLA) | TSLA Price Prediction, which I think you’ve heard of. Can you fill us in on that?

[00:00:13] Doug Mcintyre: Tesla’s Chinese sales dropped to a three year loan. Uh oh. It now has single digit market share in China, which, as you know, is the largest EV market in the world by right.

[00:00:25] Doug Mcintyre: Significant multiple. So let’s take a look at this for a second. He’s being smothered in China by BYD and other companies. There are apparently a hundred EV companies in China. A lot of ’em are gonna go bankrupt, but it’s still, you know, it’s a feeding frenzy, which makes it harder right now. I want to put a condition on this, the cars he made in China and exported, that was a good number. His sales in China were horrible. As you know, if you look at the EU numbers in a lot of countries over there, his, his drops year over year are well into the double digits.

[00:01:03] Lee Jackson: Yeah.

[00:01:03] Doug Mcintyre: In the United States, his, his EV market share in the United States peaked at 80%.

[00:01:10] Doug Mcintyre: It was 42% in the third quarter in the US you’ve got the expiration of the $7,500 tax credit. Yep. Boom. Please, please don’t tell me that that’s gonna help EV sales in the United States. It’s not. They’re gonna go through through the floor, which is gonna hurt. I don’t think so. Okay. So Tesla’s car business is completely in the tank.

[00:01:31] Doug Mcintyre: It’s shattered. And that means that investors, ’cause the stock is doing very well, it is and bought into, uh, the Musk point of view, view of Tesla, right? Which is Tesla will be an AI, robotics, Robo Taxii company within the next year or two. Now, the thing I like about this is there’s no evidence of it.

[00:01:57] Doug Mcintyre: No. Okay. It’s like, okay. I, I sort of believe you, but can you show me. He does not have any robots. I mean, he has demo. I, you know, of course he’s got some robots.

[00:02:07] Lee Jackson: Yeah, he’s got prototype, but that’s about it.

[00:02:10] Doug Mcintyre: Yeah. He’s not manufacturing robots. He’s not manufacturing robot taxis. Okay. They’re running in a few places.

[00:02:16] Doug Mcintyre: As a matter of fact, today, Waymo just announced that they will be running their cars on the open highways outside cities. I,

[00:02:23] Lee Jackson: I saw that.

[00:02:24] Doug Mcintyre: Well, okay. Every time somebody announces that, it’s bad for Musk. Okay. Yeah. Any, anytime somebody advances the self-driving car, Robo Taxii, that. You know, that falls apart.

[00:02:35] Doug Mcintyre: He’s not an AI company. Alright? I understand this self-drive. Now they’re talking about Tesla investing in X ai, which is right, his AI company, right? But quite frankly, I don’t get it. I mean, you put it on your balance sheet. If it goes up, it helps your balance sheet, but unless you also have a strategic contract with them.

[00:02:58] Doug Mcintyre: Yeah, yeah. About how you’re gonna be using the, the AI products that come from xai. Th th there’s no, dare there. I don’t, it’s, we’ll take some of Tesla’s cash and we’ll move over. XI, I could use it, but there’s nothing in it for Tesla shareholders. Okay.

[00:03:15] Lee Jackson: Unless, doesn’t seem to be, I mean, they’d be better off if he was up to rolling SpaceX in there, you know?

[00:03:21] Lee Jackson: Yeah. As a matter of fact, let’s merge ’em all. Let’s just take,

[00:03:24] Doug Mcintyre: I want a SpaceX XAI, Tesla, publicly traded company. Al I wanna be in the rock. I’ll be rockets.

[00:03:32] Lee Jackson: Kind of a GE, kind of a GE move in a, in a,

[00:03:35] Doug Mcintyre: I want the former Twitter, so I wanna be social. I’m social media. Throw that in there. AI and rockets. Okay.

[00:03:42] Doug Mcintyre: Yeah.

[00:03:43] Lee Jackson: and also, um. You can get to your, uh, internet, satellite Internet as, as well. Okay.

[00:03:49] Doug Mcintyre: I’m sorry. I’m sorry. I missed one. Right. Okay.

[00:03:52] Lee Jackson: You, you’ve got to throw that in there too. Alright, well, okay. Alright. I’ve

[00:03:55] Doug Mcintyre: got, uh, it’s like GE used to be under Welsh. We have five, that’s what I just said, like GE five, five divisions.

[00:04:01] Doug Mcintyre: Okay. Got the internet division, the space division, the social media division, the AI division, and the car division. And the car division. Right. And as it was true with GE, none of them are related to the things like GE. They have no, not, not

[00:04:14] Lee Jackson: to the original story. No. And, and like we, like we’ve told everybody every time that happens and they all GEs just the minute they kicked it out of the Dow and they, you know, spun off all the other stuff, they all immediately went higher.

[00:04:28] Lee Jackson: So, yes. Yeah, we’ll see. It’s conglomerate.

[00:04:30] Doug Mcintyre: Conglomerates in general are bad,

[00:04:32] Lee Jackson: right?

About the Author Douglas A. McIntyre →

Douglas A. McIntyre is the co-founder, chief executive officer and editor in chief of 24/7 Wall St. and 24/7 Tempo. He has held these jobs since 2006.

McIntyre has written thousands of articles for 24/7 Wall St. He is an expert on corporate finance, the automotive industry, media companies and international finance. He has edited articles on national demographics, sports, personal income and travel.

His work has been quoted or mentioned in The New York Times, The Wall Street Journal, Los Angeles Times, The Washington Post, NBC News, Time, The New Yorker, HuffPost USA Today, Business Insider, Yahoo, AOL, MarketWatch, The Atlantic, Bloomberg, New York Post, Chicago Tribune, Forbes, The Guardian and many other major publications. McIntyre has been a guest on CNBC, the BBC and television and radio stations across the country.

A magna cum laude graduate of Harvard College, McIntyre also was president of The Harvard Advocate. Founded in 1866, the Advocate is the oldest college publication in the United States.

TheStreet.com, Comps.com and Edgar Online are some of the public companies for which McIntyre served on the board of directors. He was a Vicinity Corporation board member when the company was sold to Microsoft in 2002. He served on the audit committees of some of these companies.

McIntyre has been the CEO of FutureSource, a provider of trading terminals and news to commodities and futures traders. He was president of Switchboard, the online phone directory company. He served as chairman and CEO of On2 Technologies, the video compression company that provided video compression software for Adobe’s Flash. Google bought On2 in 2009.