Tesla Gains Upper Hand With Help From China

The American consumer has been battered.

Declining iPhone sales says it all, but that is nothing compared to the Chinese consumer who are drowning in a cesspool of their own debt.

The Chinese economy is threatening to become the new Japanese economy which is infamous for its run of lost decade after lost decade.

Who cares?

I don’t, but lithium prices do and that’s why we need to focus on as the lust for EVs in the western world picks up pace.

The Chinese have cornered the lithium market and supply has expanded.

This should allow EV makers like Elon Musk to lower the price of Tesla’s further effectively winning the price war. The inverse of Bidenomics sometimes happens, but usually takes the Chinese to flood the market with extra product and in this case lithium. 

Every small EV stock should be ignored. There is Tesla and nobody else.

Lithium prices are crashing around the world.

After a buying frenzy sent global prices soaring though last year, they’ve since plunged as electric vehicle demand crashes and supplies are expected to remain strong.

The weakness has been especially pronounced there as battery makers tap stockpiles built up during the boom, while demand concerns are being exacerbated by wider fears about the country’s economy.

Chinese sentiment is being hurt by weak consumer and business confidence and an ongoing property crisis.

The nation’s EV sales growth slowed to 37% in the second quarter from a year earlier, versus a global average of 50%.

That’s helped push most-active Chinese lithium carbonate futures down about 37% since they started trading in July. They’re at a level that works out to a roughly 35% discount to lithium hydroxide futures in the US, according to traders.

The price decline has further to go. Lithium carbonate and hydroxide could drop another 30% in the near term on the back of weaker demand, high inventories and improved supply.

Tesla can lower the price of EVs as it seeks to capitalize on US consumer’s lack of discretionary budget as inflation takes a bite out of their daily budgets.

Today, the carmaker marked down the starting price of the base Model 3 by $1,250 to $38,990.

Tesla also lopped $2,250 off the price of the performance version of the Model 3, which now starts at $50,990, and $2,000 off the long-range and performance versions of the Model Y sport utility vehicle, which now cost $48,490 and $52,490, respectively.

The biggest factor contributing to Tesla’s price cuts has been the lifting of production constraints that held the company back for years.

Tesla still maintains a dominant position in the US electric-vehicle market, though it’s increasingly relied on discounting to preserve its position. Fresh product could help buoy pricing in the coming months, with the carmaker recently debuting an updated version of the Model 3.

Tesla has already identified the race to the bottom for the price of EVs and this should crush the rest of the competition as EVs turn from luxury goods to commodities.

Just take a look at rivals like Rivian (RIVN) who lose $33,000 for each vehicle they sell. EV maker Lucid’s $338,000 loss per car Is turning investors off

I wouldn’t put a cent into any other EV stock aside from Tesla.

They will be the future iPad on wheels that Steve Jobs dreamed about and now they can lower prices even more aggressively now that the price of lithium has crashed.

Musk was smart to start the price war earlier to crush competition.