Tesla HELL.

oh you're gonna need coupon code PP

after all this is said and done expires

Friday we need to talk about Tesla hell

and I'll tell you the last 90 minutes

have absolutely been Tesla hell I woke

up at 3 59 and I'm like what the hell

Tesla what the hell and now we're

getting reports from the Shanghai

Securities Journal that no don't worry

the rumors about Tesla are false

I don't know about that okay let's break

down The Good the Bad and the Ugly here

because there are some potentially real

big issues and there's some red flags

that corroborate those potential issues

at Tesla but again I want to be clear up

front here because I don't want people

sitting in the comments which they're

gonna do anyway before they even watch

the video

uh again right now reports about this

Tesla issue are reportedly potentially

false information according to the

Shanghai Securities Journal citing Tesla

China sources but folks let's break down

what This Disaster is first I'm going to

start with the good which is supposedly

not fake news and then we'll talk about

what is potentially now fake news such a

disaster okay first good news Tesla

Shanghai produced 100 291 vehicles from

a Shanghai plant in November this is

according to the Chinese passenger car

Association and this is a new record

Tesla produced 83 135 vehicles from its

plant in September 71 704 vehicles in

October slightly less and if you add

this up for the first 11 months of the

year this puts total Shanghai Tesla

deliveries in excess of 650 000 Vehicles

655 069 to be exact that is actually up

a very solid growth rate of up 62.86

percent from last year that's huge

that's over 50 percent growth and

remember Shanghai is also an export Hub

so this is a really great number in fact

if we got another 100 000 Vehicles

delivered in in December we would be at

750

000 Vehicles produced at Tesla Shanghai

in just one year absolutely freaking

phenomenal terminal in the first 11

months of 2021 we did just 402 000

vehicles that would be almost twice as

much absolutely insane really really

good news now keep in mind Tesla

Shanghai fulfills demand for both the

European and Chinese markets generally

what happens is the first half of the

quarter is reserved for export

production then they shift gears and

focus on local production and this is

where potentially we're starting to see

issues Reuters whom Elon Musk has

previously called fake news multiple

times and this story was echoed by

Bloomberg has come out to suggest that

Tesla will cut Shanghai plant production

by 20 as soon as this week according to

quote widespread reports which those

widespread reports were apparently

started and rumored by two individuals

unauthorized to speak on the matter

now this is very scary because the one

thing that could really collapse Tesla's

growth story is a lack of demand and

potentially therefore a lack of pp or

pricing power if either of those things

happens or both of them happen together

the valuation for Tesla could collapse

and there are some red flags that

indicate some of the demand for Tesla

may be beginning to wane although we as

Bulls like to explain this away for

example Tesla is now offering a three

thousand seven hundred and fifty dollar

price cut in the United States for

anyone buying a model 3 or model y

before the year end now that might be

because many potential Tesla buyers are

just waiting until January 1st where you

could get a tax credit of up to seven

thousand five hundred dollars the

benefit of that seven thousand five

hundred dollars is it's basically twice

as much as 37.50 but if you take that

tax credit Buy buying it in January of

2023 you have to wait until 2024 to

actually get it right whereas if you

take a 37 500 uh sorry 37.50 discount

here in December you get that right away

so you do have a little bit of a time

value of money consideration there but

again why do we need subsidies of demand

in America is so strong on top of this

we've got potential subsidies expiring

in a lot of European countries at the

same time as Berlin is struggling

ramping their rumors circulating that

people are showing up for work that Giga

Berlin has only hired 7 500 workers

instead of the 12 000 it was expecting

to hire by this point its production has

substantially missed some of the

Glorious expectations that Elon Musk has

set in its ramp and some workers are

describing Giga Berlin as utter chaos

and people taking weeks worth of sick

days because there's little to do at the

factory now those are just unconfirmed

rumors so and could just be straight up

bashing and nonsense that makes no sense

at all but let's focus on some facts

fact number one Neo has reduced

production in April and November

potentially as I hate to say but

potentially as more expensive vehicle

demand in China is waning not just

because the supply chain constraints see

byd is actually killing it they sold a

record of 230 400 all electric and

plug-in hybrid vehicles in November

that's up 153 percent versus a year

earlier and up 5.8 percent versus

October that's a really big move up 113

000 of those Vehicles were fully

electric and 116 000 were plug-in

hybrids so they do about 50 50 right 50

hybrids 50 uh fully electric however

those vehicles are less expensive and

there is this potential shift from

Chinese from Chinese buyers who are

recognizing their household wealth is

deteriorating real estate is

deteriorating the Chinese economy is

collapsing are shifting to less

expensive cars or just delaying car

purchases at all

byd cars sell for about one hundred

thousand to two hundred thousand Yuan

versus Tesla vehicles starting around

300 000 Yuan that works out to fourteen

to twenty eight thousand dollars versus

forty two thousand dollars for a cheaper

Tesla and there are a lot of concerns

that even if Tesla ends up reopening we

could end up leading to a

hospitalization wave that would overrun

the ICU beds needed in China by a factor

of five to one The Economist also tells

us that those over 80 years old or over

100 times as likely as a healthy 20 year

old to die from covid and the economists

suggest that the Chinese government has

not properly prepared the elderly by

prioritizing vaccines for them so number

one argument four what could be

happening in China is a supply chain

issue I don't buy this though I actually

think there's a greater potential of a

straight up Chinese crash after all if

in the second half of a quarter most of

the vehicles are just destined for China

then it wouldn't surprise me to see a

production cut in China if Chinese

demand is plummeting or shifting towards

lower end Vehicles the larger potential

issue could be the sign of a global

recessionary crash this would be a sign

that Tesla is not in fact immune to

recessionary Dynamics the previous

thesis that I've held is that Tesla

would be at least somewhat insulated

from recessionary Dynamics because of

their massive order backlog the problem

is that massive order backlog has

already begun shrinking now the backlog

is still present you can see we still

have as of November 15th according to

Troy on uh on on Twitter tests like is

his handle you have an order backlog of

255 000 units which is about half as

much as we're a little less than half as

much but nearly half as much as the

backlog that we had in the summer and

you can see the red bar which represents

China has almost completely evaporated

so hopefully the backlog collapse is

solely a collapse from China although

you can see even the U.S back backlog

excuse me which is the light blue line

here or bar uh is also starting to

shrink now we would expect shrinkage uh

in a recession now keep in mind on the

Tesla earnings calls we've regularly

heard Elon Musk tell us that Tesla does

not face a demand problem it faces a

production problem well now it's

starting to look like we're facing a

demand problem and that is a scary scary

word for Tesla because it could collapse

the valuation and it's also not good

given that sometimes Elon Musk is known

to say things that are beneficial to

himself not necessarily Tesla

shareholders I hate to say it but right

before Elon Musk sold about 20 million

shares of Tesla to help fund his Twitter

purchase what did he do on earnings call

he told us about how Tesla one day

should be worth more than Apple and

Saudi aramco combined and right after

that after leaving this beautiful carrot

hanging walked right out the door and

sold 20 million shares so if that is

possible to happen why is it not

possible for Elon Musk to potentially

mislead shareholders about Tesla demand

but again if Tesla demand collapses

Tesla's valuation has some real big

heartaches in front of it after all if

Tesla's EPS is slated to grow 45 over

the next year and their their price to

earnings ratio forward for the next 12

months is about 45 then we have a PEG

ratio of one if their price to earnings

ratio based on today's price is under 40

then we actually have a PEG ratio of

under one and that seems like a great

deal unless of course the growth story

falters if the growth story for Tesla

falters then what ends up happening is

Tesla's valuation collapses this is

really bad news and what potential red

flags are there well

Elon Musk has been complaining about the

Federal Reserve needing to immediately

cut rates some folks are now suggesting

hmm maybe they need to cut rates because

demand for Tesla is faltering if you

also search Tesla lease or Tesla for

sale on Google search Trends even though

we're producing substantially more

Vehicles now than we've ever produced

before a Tesla Tesla search Trends are

not holding up if anything in most cases

they're lower than where the search

Trends were last year and all of this

news follows an insurance subsidy in

China and a price cut in China as well

as the pricing subsidy we already talked

about in the united states in the United

States excuse me which is a suggestion

that potentially the backlog is starting

to fail and potentially we could be

seeing a loss of pricing power in both

China and globally now

the best thing that could happen here is

that Elon Musk could reiterate uh any of

this uh this this report about reduced

uh production in China which that

appears to be what's happening now it

appears to be that Tesla China is coming

out and saying that the media report of

December out output cut added Shanghai

plant cut or a plant is untrue this is

breaking as of you know 30 seconds ago

this is coming out here although about

12 minutes ago we did we get a report

that this was false information now

we're getting information that this is

just straight up untrue

so it looks like there's going to be a

lot of drama evolving about this I would

expect some form of commentary from Elon

Musk today if this report is untrue and

we produced 100 000 vehicles at Giga

Shanghai that would be very bullish as

long as those vehicles are being sold

but I will tell you Tesla's demand is

being called into question right now and

this is potentially a red flag for Q4

because even if it's untrue that

production is not going to cut it get

cut in December what if the demand story

is beginning to falter and rumors are

starting to circulate that production

will be cut in the future at Tesla

remember folks where there's smoke

sometimes there can be fire

we'll see anyway thanks for watching

folks and good luck