Tesla Price Prediction: A Blow-off Top Followed by Epic Collapse

  • Hertz Announced an initial order of 100,000 Tesla’s to be filled by year-end 2022.
  • Tesla skyrocketed from a $913-billion market cap (October 22, 2021) to $1.21 trillion.
  • The bullish response added $300 billion, implying a $3-million price tag per vehicle ordered (not sold).

Tesla Daily Chart

Tesla shares skyrocketed above $1000 on the Hertz announcement. Tesla is now worth more than all the auto manufacturers combined. More on that later.

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Tesla Market Cap

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https://ycharts.com/companies/TSLA/market_cap

Gross Profit

Let’s say Tesla makes a generous $20,000 profit per vehicle ($20,000 X 100,000). That indicates a gross profit of $2 billion, far shy of the $300-billion increase. What is going on here?

Ford Motor Company

By comparison, Ford Motor Company currently sports a $72-billion market cap, so Tesla adding $300 billion in market cap is like adding four (4) Ford Motor Companies.

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https://ycharts.com/companies/F/market_cap

Major Auto Companies by Market Cap

Below is a quick rundown of all major auto manufacturers by current market cap. Tesla is worth more than all and sells less than 1% of the vehicles.

With a market cap of $1.21 trillion, TSLA is trading at a 25% premium above all auto manufacturers on the planet!

Tesla looks, acts, and smells like a bubble. The question is…when will it pop?

AG Thorson is a registered CMT and expert in technical analysis. He believes we are in the final stages of a global debt super-cycle. For regular updates, please visit here, or follow AG on Twitter at https://twitter.com/ag_thorson

International Opposition Mounts Over Proposed U.S. EV Tax Credit

A group of 25 ambassadors to Washington wrote U.S. lawmakers and the Biden administration late Friday saying “limiting eligibility for the credit to vehicles based on their U.S. domestic assembly and local content is inconsistent with U.S. commitments made under WTO multilateral agreements.”

The U.S. Congress is considering a new $12,500 tax credit that would include $4,500 for union-made U.S. electric vehicles and $500 for U.S.-made batteries. Only U.S. built vehicles would be eligible for the $12,500 credit after 2027, under a House proposal released this week.

Canada and Mexico have issued separate statements in the last week opposing the plan. The U.S. State Department declined to comment Saturday and the White House did not immediately respond to a request for comment.

The proposal is backed by President Joe Biden, the United Auto Workers (UAW) union and many congressional Democrats, but opposed by major international automakers, including Toyota Motor Corp, Volkswagen AG, Daimler AG, Honda Motor Co, Hyundai Motor Co and BMW AG.

A dozen foreign automakers wrote California’s two senators on Friday urging them to abandon the plan that they said would discriminate against the state.

UAW President Ray Curry said the provision will “create and preserve tens of thousands of UAW members’ jobs” and “would be a win for auto manufacturing workers.”

The EV tax credits would cost $15.6 billion over 10 years and disproportionately benefit Detroit’s Big Three automakers – General Motors, Ford Motor and Chrysler-parent Stellantis NV – which assemble their U.S.-made vehicles in union-represented plants.

The ambassadors that also include Poland, Sweden, Spain, Austria, Netherlands, Belgium, Cyprus, Ireland, Malta, Finland, Romania and Greece said the legislation would harm international automakers.

They said it “would violate international trade rules, disadvantage hard-working Americans employed by these automakers, and undermine the efforts of these automakers to expand the U.S. EV consumer market to achieve the (Biden) administration’s climate goals.”

The letter added it “puts U.S. trading partners at a disadvantage.”

Autoworkers at the foreign automakers in the countries that wrote are nearly all unionized but not in the United States.

“Our governments support workers’ right to organize. It is a fundamental right and should not be used in the framework of tax incentives, setting aside the opportunities for nearly half of America autoworkers,” they wrote.

(Reporting by David Shepardson; editing by Diane Craft)

Marketmind: Move over Evergrande, Time to Watch Soaring Bond Yields

A look at the day ahead from Saikat Chatterjee.

European and U.S. stock futures fluctuated between gains and losses after U.S. stocks posted their biggest two-day rise since July.

While a large part of those gains can be attributed to easing concerns about Evergrande contagion, Thursday’s spike in yields in the global $60 trillion plus government debt markets raised the prospects of tighter monetary policy sooner than later.

Long-term U.S. Treasury yields have surged the most in 18 months as traders brought forward expectations for the first Fed rate hike to the end of 2022 and the Bank of England opened the door to a 2021 rate increase — sparking the biggest jump in two-year UK gilt yields since March 2015.

Yield curves from Australia to Germany bear steepened in response and the dollar sprung to the top of its 2021 trading range. While it remains to be seen whether the rise in yields can be sustained, some signs of weakness can be detected in the “buy the dip” trade from investors.

Value stocks, a beneficiary of higher yields, outperformed growth ones on Thursday while FAANG stocks have underperformed broader markets so far this month. And if investors are hoping quiet weekend, think again.

Sunday’s election in powerhouse European economy Germany will provide food for thought as Chancellor Angela Merkel steps down after 16 years in charge.

Her successor will play a new role in shaping domestic and broader EU policy and have to steer Germany’s economy through a still uncertain post-COVID environment.

Thursday’s flash PMIs for September pointed to a sharp slowdown in economic activity from the previous month from rising energy prices and difficulty in sourcing parts and materials, headwinds that are unlikely to abate in the coming days.

Key developments that should provide more direction to markets on Friday:

– ECB’s Lagarde says many causes of inflation spike temporary: CNBC

– Nike warns on holiday delays, cuts full-year sales estimate

– Daimler’s Mercedes-Benz to take a 33% stake in battery cell manufacturer Automotive Cells Company

– Germany’s IFO survey for September

– Fed speaker corner: Powell, Clarida

For a look at all of today’s economic events, check out our economic calendar.

(Reporting by Saikat Chatterjee; Editing by Dhara Ranasinghe)

German Shares Slump 2%, European Index Hits Two-Month Lows

The pan-European STOXX 600 index was down 1.5% by 07:45 GMT, with mining stocks plunging 3.2% on a slide in commodities prices.

Asian equities also skidded following a torrid session for China Evergrande, the world’s most indebted property developer.

The benchmark European STOXX 600 has now fallen for three straight weeks on worries about slowing global growth, soaring inflation, persistently high COVID-19 cases and the spillover from tighter regulation of Chinese firms.

The U.S. Federal Reserve’s policy meeting is in focus on Tuesday and Wednesday, where the central bank is expected to lay the groundwork for a tapering. Overall, 16 central banks are scheduled to hold meetings this week, including in the UK, Norway, Switzerland and Japan.

“To be sure, the (Fed) is set to default to keeping the QE (quantitative easing) spigots open at this week’s (meeting), given the sizable August jobs disappointment alongside a spotting of soft economic indicators,” said Vishnu Varathan, head of economics and strategy at Mizuho.

“But this merely defers taper. By how much is the question.”

German shares tumbled 1.8% to their lowest since late-July as data showed a bigger-than-expected jump in producer prices last month.

In its biggest ever overhaul, the blue-chip German index began trading on Monday with an increase in the number of constituents to 40 from 30.

Europe’s fear gauge jumped to a four-month high.

China-exposed luxury stocks such as LVMH, Kering, Hermes and Richemont fell between 2.5% and 3.7%, extending sharp losses from last week.

Daimler AG shed 2.3% as a report cited the chief of its truck division, the world’s largest, as saying the unit had seen the supply of crucial chips tighten further in recent weeks.

Lufthansa, on the other hand, reversed early declines to jump 3.1% after saying it expects to raise 2.14 billion euros ($2.51 billion) to pay back part of a state bailout that Germany’s top airline received during the coronavirus crisis.

All major European subindexes were lower in morning trading, with healthcare, utilities, food and beverage and real estate posting the smallest declines. The group is perceived to be a safer bet at a time of heightened economic volatility.

For a look at all of today’s economic events, check out our economic calendar.

(Reporting by Sagarika Jaisinghani in Bengaluru; Editing by Arun Koyyur)

Daimler CEO Says Carmakers Could Face Chip Shortage Into 2023

Carmakers, forced by the COVID-19 pandemic to shut down plants last year, face stiff competition from the sprawling consumer electronics industry for chip deliveries, hit by a series of supply chain disruptions during the pandemic.

Cars have become increasingly dependent on chips – for everything from computer management of engines for better fuel economy to driver-assistance features such as emergency braking.

“Several chip suppliers have been referring to structural problems with demand,” Ola Källenius told reporters during a roundtable event ahead of the Munich IAA car show. “This could influence 2022 and (the situation) may be more relaxed in 2023.”

The IAA show is the first major motor industry event worldwide since the COVID-19 pandemic.

Daimler said last week it expected significantly lower third-quarter sales at its Mercedes unit due to a global semiconductor shortage, becoming the latest in a string of automakers to take a hit to revenues. Automakers from U.S. group General Motors to India’s Mahindra and Japan’s Toyota have slashed output and sales’ forecasts due to scarce chip supplies, made worse by a COVID-19 resurgence in key Asian semiconductor production hubs.

Källenius said on Sunday that despite the ongoing chip shortage, the German carmaker hopes its own supply of semiconductors will improve in the fourth quarter.

As part of its plans to electrify its model range, Mercedes-Benz will show off several fully electric vehicles at the show in Munich. These will include global premiers for the EQE, the first fully electric for the premium carmaker’s high-performance AMG brand and a concept car for its luxury Maybach brand. The company will also introduce a fully electric SUV, the EQB, to the European market.

In July Daimler said it will spend more than 40 billion euros ($47.5 billion) by 2030 to take on Tesla Inc in an all-electric market, but warned the shift in technology would lead to job cuts.

Outlining its strategy for an electric future, the German carmaker said it will build eight battery plants as it ramps up electric vehicle (EV) production and from 2025 all new vehicle platforms will only make EVs.

Källenius said the company’s plan to spin off its trucking unit Daimler Trucks by the end of 2021 remains on track. ($1 = 0.8416 euros)

For a look at all of today’s economic events, check out our economic calendar.

(Reporting by Nick Carey; Editing by Susan Fenton)

 

Unrelenting Chip Shortage Could Dent Daimler Car 2021 Sales

By Nick Carey

Daimler is among the major carmakers that have had to cut back production this year because of the shortage spurred by the coronavirus pandemic.

The company said that its visibility into how the chip supply situation will develop is currently low.

“Improving supply visibility is a top priority for us,” CEO Ola Källenius said on a conference call with analysts and investors.

The shortage comes as demand for cars has spiked during the global economy’s recovery from the ravages of COVID-19, sending up prices of both new and used vehicles as inventories shrink.

Mercedes-Benz car sales in the second quarter jumped 27%, with a 54% jump in Europe, Daimler’s second market after China.

After soaring in late 2020 and the first quarter, Mercedes-Benz sales in China posted a modest gain of 5.8% in the second quarter.

The company said it now expects full-year car sales to be in line with 2020 levels. Previously the German carmaker had said it expected car unit sales this year to be significantly above last year’s.

Daimler also said that 2021 adjusted profit margins at its truck and bus division would be between 6% and 7%, below its previous forecast of a range from 6% to 8%.

The company confirmed on Wednesday that second-quarter adjusted group earnings before interest and tax (EBIT) were 5.42 billion euros ($6.38 billion), with car and truck divisions beating analyst targets.

Daimler reported preliminary results last week.

($1=0.8495 euros)

(Reporting by Nick Carey; editing by Clarence Fernandez and Jason Neely)

Marketmind: “A Ways Off” and That’s Good

You couldn’t call China’s data dismal — average growth actually surpassed Q1 while June retail sales and industrial output beat expectations. But it does show authorities, who last week unleashed one trillion yuan into the financial system, will ensure conditions stay loose.

But markets’ delight after Powell told Congress he saw no need to rush the shift towards tighter post-pandemic monetary policy, has not lasted long.

World stocks are off recent record highs, tempered possibly by spiking COVID-19 cases across Asia and signs the post-pandemic bounce in company earnings is hitting a peak.

Asian shares rallied, led by a 1% rise in Shanghai but U.S. futures are mostly lower, with the exception of the tech-heavy Nasdaq. European markets too, are opening weaker and 10-year Treasury yields are down at 1.33%, almost 10 basis points off Wednesday’s high point.

The news from the corporate world is all good — the four biggest U.S. banks, Wells Fargo, Bank of America, Citigroup and JPMorgan have posted a combined $33 billion in profits. Asset manager BlackRock beat estimates, with assets at a record $9.5 trillion.

Omens in Europe are good too, with Sweden’s SEB, carmaker Daimler and food delivery firm Just Eat all reporting buoyant earnings. And earlier in Asia, Taiwanese chipmaker, TSMC, posted an 11% rise in Q2 profits.

Key developments that should provide more direction to markets on Thursday:

– South Korea held rates but signalled pandemic era record-low interest rates was coming to an end

-UK added 356,000 jobs in June

-ECB Board Member Frank Elderson speaks

-Philly Fed index

-Bank of England interest rate-setter Michael Saunders speaks

Fed events: Powell testimony continues, Chicago Fed President Charles Evans speaks

US earnings: BNY Mellon, Charles Schwab, US Bancorp, Morgan Stanley, Alcoa

For a look at all of today’s economic events, check out our economic calendar.

(Reporting by Sujata Rao; editing by Dhara Ranasinghe)

 

Daimler, Volvo and Traton Plan $600 Million Truck-charging JV

Charging infrastructure expansion has been a central hurdle to the mass adoption of battery-powered vehicles.

The three companies, which are normally competitors, will invest 500 million euros ($593.20 million) in the venture that they will own equally and that will start operations in 2022.

The aim is to install and operate at least 1,700 charging points within five years.

The joint company will be based in Amsterdam and will over time seek further partners and public funding.

($1 = 0.8429 euros)

(Reporting by Ilona Wissenbach and Chris Steitz; writing by Tom Sims; editing by Barbara Lewis)

Daimler Set to Spin Off Truck Unit by Year End – CFO

“We are right on schedule with the detailed preparations for this complex project and want to float Daimler Truck on the stock exchange as an independent company by the end of this year,” CFO Harald Wilhelm told the Automobilwoche weekly.

“We are convinced of the industrial logic and benefits of the planned realignment of Daimler and the spin-off of Daimler Truck.”

A Daimler spokesperson said on Sunday the company had no further comment on the report.

The plan – announced in February – is aimed at increasing Daimler’s investor appeal as a focused electric, luxury car business, as the Mercedes-Benz brand challenges Tesla Inc, Porsche, BMW and others.

LBBW analyst Frank Biller told the magazine Daimler Truck could join the German DAX index of blue chip companies next March.

In the truck market, Daimler faces traditional rivals such as Sweden’s AB Volvo, Volkswagen AG unit Traton and Paccar Inc

Under the planned spin-off, a significant majority stake in Daimler Truck would be distributed to Daimler shareholders.

(Reporting by Emma Thomasson; Editing by Jan Harvey)

Daimler Wants to Produce Its Own Battery Cells – Business Insider

Daimler struck a deal with Chinese battery supplier Farasis Energy in 2019 for the supply of lithium-ion battery cells and Farasis is building a factory in Germany.

However, delays to the construction of the factory and issues with samples for the cells have prompted Chief Executive Ola Kaellenius to attach more importance to the independent production of battery cells, Business Insider said.

The magazine said it was unclear whether Daimler wants to manufacture the battery cells completely on its own or in co-operation with a partner.

(Writing by Caroline Copley; Editing by Riham Alkousaa)

Daimler’s China Venture Aims to Raise Capacity 45% at Mercedes-benz Plants: Document

The projected upgrade at Beijing Benz Automotive Co (BBAC), 49%-owned by Stuttgart-based Daimler and the latter’s main business in China, was set out in a document posted on the BBAC website last month to seek public opinion on the expansion.

It comes as demand for BBAC’s luxury vehicles surges in the world’s biggest car market. China is Daimler’s biggest country business, with more cars sold there than in Germany and the United States combined.

Last year BBAC sold a record 611,000 vehicles in the country, up 8% from 567,000 in 2019. The didn’t specify the base capacities of the factories, but the company has previously said combined capacity of the two plants was 520,000 vehicles a year.

According to the document, the joint venture will increase working days to 312 per year at both of its Beijing plants. Previously, one plant, known as the MRA factory, had 290 days of output per year while the other, the MFA factory, had 250 days.

One of the plants will also add one 7.5-hour shift per working day, according to the document, which did not specify the investment related to the capacity increase at the two factories, which plan to make gasoline and electric-powered vehicles.

BBAC, which declined to comment on the projected upgrade, also has a separate electric vehicle factory in Beijing with capacity of 150,000 cars per year.

The venture is 51%-owned by BAIC Motor. The latter’s parent, BAIC Group, owns 5% of Daimler, which didn’t answer Reuters’ questions on the capacity upgrade project.

Aside from BBAC, next year Daimler will start making electric Smart cars with China’s Geely, which holds a 9.7% stake of Daimler, the companies said in 2019. It also has a truck venture with another BAIC Group unit, Beiqi Foton.

Chinese policymakers expect 20% of overall new vehicle sales will be battery electric, plug-in hybrid or hydrogen fuel-cell vehicles in 2025.

(Reporting by Yilei Sun and Tony Munroe; Editing by Kenneth Maxwell)

Daimler India Shuts Bus and Truckmaking Unit for Three Days

By Sudarshan Varadhan and Aditi Shah

“Daimler India Commercial Vehicles (DICV) has declared a non-production day for June 1 ’til June 3, 2021, due to temporary parts shortages caused by lockdown restrictions,” the spokesman said in a statement.

The plant is the first near India’s Chennai automotive manufacturing hub to order a temporary shutdown owing to a parts shortage. Global carmakers such as Ford Motor Co, Hyundai Motor Co and Renault-Nissan ordered closures last week because of worker protests over safety.

India’s factory activity growth slowed significantly in May as rising coronavirus cases curbed new orders and output while scarcity of raw materials drove up input costs, a private sector survey showed on Tuesday.

Daimler said it is supporting its employees with its health programmes, adding that it will pay workers their full salaries for the non-production period.

DICV is unit of Germany’s Daimler group and manufactures and sells trucks, BharatBenz buses and Mercedes-Benz coaches in India.

The company’s plant near Chennai also produces for Daimler truck brands such as FUSO, Mercedes-Benz and Freightliner, exporting to more than 60 markets around the world.

(Reporting by Sudarshan Varadhan; Editing by David Goodman)

Daimler to Pay Nokia Patent Fees, Ending Legal Fight

By Foo Yun Chee

Nokia, which makes 1.4 billion euros ($1.7 billion) in licensing revenues every year, and carmaker Daimler had sued each other in German courts in recent years, with mixed results.

Tech firms want automakers to pay royalties for technologies used in navigation systems, vehicle communications and self-driving cars but the latter say their suppliers should pay instead, which could reduce the fees for patent holders.

The agreement announced jointly with Daimler on Tuesday marks the latest win for Nokia which in April struck a deal with China’s Lenovo under which the world’s biggest PC maker would make a net balancing payment to the Finnish telecoms equipment maker and resolve all pending litigation.

That followed a deal with Samsung the previous month in which the South Korean company agreed to make royalty payments for its technologies related to video standards.

Nokia and Daimler said that they had reached a patent licensing deal and will also halt their litigation. The German carmaker has to date never paid Nokia for using its patents.

“We welcome the settlement, from an economic point of view and because we avoid lengthy … disputes,” a Daimler spokeswoman said.

“Under the agreement, Nokia licenses mobile telecommunications technology to Daimler and receives payment in return,” the companies said in a joint statement.

“The terms of the agreement remain confidential as agreed between the parties,” they added.

The end of the dispute means a German court’s request to the Luxembourg-based Court of Justice, Europe’s highest, last year for guidance on the issue will be moot.

Audi, Bentley, BMW, Mini, Porsche, Rolls Royce, Seat, Skoda, Volkswagen and Volvo are already paying patent fees to Nokia.

($1 = 0.8179 euros)

(Reporting by Foo Yun Chee; Editing by Alexander Smith)