Tesla Bear Says 'EVs Are Not For The Masses' Despite Impressive Q4 Deliveries: 'You Can Sell An Infinite Number Of Teslas If...'

GLJ Research CEO Gordon Johnson opined on Tuesday that electric vehicles are not suitable for the common man, despite EV giant Tesla Inc TSLA reporting full-year deliveries that surpassed market estimates.

What Happened: “EVs are not for the masses,” Johnson said, during an appearance on CNBC’s Squawk Asia program, citing high vehicle costs and low resale value. 

“These vehicles are going to be hard to afford for a worker who makes an average salary of $65,000/year in Columbus, Ohio. I am not saying it’s (EVs) going the way of the Dodos but I think that it is a niche market. It is not mass adoption like people in the media say,” he said. 

These comments followed Tesla’s announcement of annual deliveries exceeding 1.8 million vehicles, surpassing its own targets for the full year 2023. 

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However, Johnson does not consider delivery numbers as a significant indicator of EV popularity, stating, “The delivery numbers are not important. You can sell an infinite number of Teslas if you give them away for free.” He pointed to Tesla’s price cuts and their impact on operating margins, asserting that margins are more crucial than delivery numbers.

“Tesla’s operating margins are now below Toyota, Stellantis, GM, BYD, BMW, and Mercedes and that was in Q3. They are going to be even lower in Q4. We don’t know where the bottom is as Tesla is still offering discounts on its cars,” Johnson said.

“It may just not be possible to sell EVs. It looks like that’s where we are headed,” he said, adding that the lower margins also pushed other legacy automakers out of the space.

Why It Matters: In the third quarter, Tesla’s operating margin was 7.6%, while General Motors Co GM reported an 8.1% adjusted EBIT margin, and Ford Motor Co F reported 5%. 

During Tesla’s third-quarter earnings call, CEO Elon Musk expressed concerns about falling demand due to rising interest rates, making EVs more expensive for consumers. Musk hinted at potential further price cuts until interest rates drop.

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