Why Tesla Bear Gordon Johnson Is Forecasting Sequential Volume Decline In Q4

Tesla Inc TSLA is set to witness a quarter-over-quarter drop in the volume of cars sold in the fourth quarter, according to GLJ Research's Gordon Johnson.

Johnson On Tesla's European Demand: Tesla sold just 1,384 cars in the European Union in October, but exported 7,000 made-in-China, or MIC, Model 3s during the month, Johnson said.

Despite the demand-supply imbalance, Tesla is looking to export another 5,000 MIC cars to other geographies in the November-December period, the analyst said.

This also suggests continued weakness in China demand, he said. 

Tesla is planning to export a total of 12,000 MIC cars in 2020, Johnson said. 

Tesla's sales volume in Norway, the Netherlands and Spain is down 92% year-over-year in the quarter-to-date period, the analyst said. The readthrough is that Tesla is losing huge share to Volkswagen A G Unsponsored Represent 1 10th Sh ADR VWAGY, Mercedes and Hyundai Motor Company GDR HYMT, he said. 

While Tesla has sold just 15 cars in Norway, the Netherlands and Spain so far in November, Volkswagen has sold 839 iD3 cars and 157 Audi eTrons, according to GLJ Research. 

Related Link: Tesla's Growth Will Lose Steam In Q4: Bear Analyst Gordon Johnson

Tesla Shipment Data Uninspiring: Tesla's boat loadings were down 2.5% quarter-over-quarter and 32% lower year-over-year, Johnson said.

The company has time until next week to ship in order to make fourth-quarter deliveries, the analyst said. 

MIC Model 3 cars departed only last week, and it would take about 28 days for these to arrive and at least another week to prepare them for delivery,  he said. 

With more shipments unlikely from China , two or three more shipments could arrive from Fremont, Johnson said. 

Even with that, Tesla's loadings would be down notably year-over-year, according to GLJ Research. 

Tesla's China Story Sags: Despite an 8% price cut announced Oct. 1, Tesla's MIC Model 3 NEV market share in the country plummeted by about 339 basis points month-over month from 11.8% in September to 8.4% in October, Johnson said.

The company is providing redesigned MIC Model 3 cars to EU recipients vs. those being sold inside of China, stirring discontentment locally, the analyst said.

Tesla's Growth Narrative At Risk: The quarter-over-quarter drop in volume that Johnson projects would be a "BIG" problem for the company's growth narrative, he said. 

With about 53 new EVs launching between now and the end of 2021, Johnson reiterated his view that Tesla is more like AOL/Blackberry than Amazon.com, Inc. AMZN.

The only way Tesla can avoid a quarter-over-quarter drop is by expediting the rollout of MIC Model Y cars, the analyst said.

If Tesla were to do this before the year's end, it could sell enough Model Ys in China and even exports to Europe to report sequential growth, he said. 

TSLA Price Action: At last check, Tesla shares were down 2.83% to $409.36.

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