Tesla's Model 3 Sales Fall 82% In Norway And 76% In The Netherlands

Summary

• April is off to a horrible start for Tesla in the countries in Europe where we get daily sales (registration) data: Norway and The Netherlands.
• Compared to March, the daily sales rate in Norway in April thus far is down 82%, and in The Netherlands it’s down 76%.
• For the more expensive and higher-margin Model S and X, Tesla is losing market share to Audi and Jaguar’s electric cars in the most dramatic of ways.
• Audi eTron and Jaguar i-Pace are outselling Tesla Model X and S combined by a factor of 5.7 to 1 in Norway, and 9.7 to 1 in The Netherlands.
• Tesla usually makes up for an April shortfall in the last month of the quarter, but this is a very deep hole from which Tesla now has to dig.
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As of this writing, we are 23 days into the second quarter, and it’s time to take the temperature on Tesla’s (NASDAQ:TSLA) sales from two of the countries in Europe where we get daily sales reports: Norway and The Netherlands. We get daily reports from Spain too, but those are so small for Tesla that they are not material: here.

Norway: Down 82%

Norway is of course Tesla’s superstar geography, as it's for almost all other electric automakers. In March 2019, battery-electric vehicles (BEVs) were 58% of sales in that country, explained as always by de-facto giant subsidies: here. In Norway, the way it works is that non plug-in cars are taxed extremely heavily, whereas BEVs are essentially not taxed at all. As a result, it gets the highest share of electric cars sold in the world by a wide margin.

Everyone were in awe with how many cars Tesla sold in Norway in March: 5,315 units. Divide by 31 days and you get 171 per day, on average. So where are we in April thus far? Here is the real-time sales chart: here.

In the first 23 days of April, Tesla sold 680 Model 3 units. That’s 30 per day. 30 per day is an 82% reduction from the March daily sales rate of 171.

Actually, during the month of April, Tesla’s Model 3 sales rate in Norway has fallen dramatically inside the month itself. Let’s start by looking at the first two weeks of April: 625 were sold, which divided by 14 days were a sales rate of 45 cars per day. That’s still a 74% decline from March, but here is what happened in the last seven days (April 17-23): Only 32 were sold. That’s less than five per day.

Five per day constitutes a 97% reduction in the per-day sales rate from March. Not good.

The Netherlands: Down 76%

The Netherlands was almost tied with Germany for Tesla’s second best-selling country in Europe in March: here. In total, 2,195 were sold, or 71 per day.

So where has Tesla started April? Unlike Norway, reporting lags a day, so we only have data through April 22 as of this writing: here. 365 cars divided by 22 days is 17 per day.

Going from 71 per day to 17 per day is a 76% decline. Not as bad as Norway’s 82% decline, but close. It’s really bad.

The Luxury Ratio (LR)

Model 3 volumes are interesting, but Tesla makes its margins on the more expensive Model S and X. So how are they doing compared to their brand new competitors, the Audi eTron and Jaguar i-Pace? Recently, I invented the term “Luxury Ratio” (LR), which is this formula:

(Audi eTron + Jaguar i-Pace) / (Tesla Model X + S)

Let’s take a look at where the Luxury Ratio stands in Norway and The Netherlands so far in April. First, Norway:

1. Jaguar i-Pace -- 232

2. Audi eTron -- 162

3. Tesla Model X -- 50

4. Tesla Model S -- 19

So that’s (232+162) / (50+19) = 5.7. Yes, for every luxury car Tesla sells in Norway in April, Audi and Jaguar sell 5.7 luxury electric cars.

Moving on to The Netherlands, where the numbers for all of them are really tiny:

1. Audi eTron -- 31

2. Jaguar i-Pace -- 8

3. Tesla Model X -- 2

4. Tesla Model S -- 2

So that’s (31+8) / (2+2) = 9.7. Yes, for every luxury car Tesla sells in The Netherlands in April, Audi and Jaguar sell 9.7 luxury electric cars.

Caveats and Objections: Acknowledged

Someone will surely point out that, yes, Tesla typically has very back-end loaded quarters, and that in the month of June, Tesla’s sales in Norway and The Netherlands will likely improve. Yes, that will likely prove true to some degree this quarter as well. In the coming weeks, we will see reports of boats loading Teslas at Pier 80 in San Francisco, on their way to Zeebrugge in Belgium and to ports in (non-EU) Norway. It probably won’t be zero.

The other factor will be the impact of Tesla selling less expensive configurations into Europe. In Q1, Tesla sold only all-wheel drive (AWD) and larger battery versions to Europe. In Q2, we may see the first deliveries there of rear-wheel drive (RWD) and smaller battery versions at lower prices. Those lower prices will obviously stimulate sales numbers, all other things equal. Whether all other things will be equal or not in Q2, I don’t know at this point.

For example, a new factor would be that Volkswagen is supposedly going to start taking deposits of its first long-range inexpensive electric car in May: here. This VW ID is a car tailored to European tastes, with a small footprint (length + width) but with a practical body style and acceptable range, with some versions over 200 miles. The price? It has yet to be announced, but it will likely undercut the Tesla Model 3. We will find out the price soon. Production starts in November, and first deliveries in Europe within a month or two after that.

This Volkswagen electric car will become a headwind to Tesla, in terms of European sales, some time possibly already in May-June 2019, as people postpone their purchase decisions while awaiting deliveries of the VW ID. Tesla sold 90,966 cars in Q4 2018 but only 63,000 in Q1 2019, and it needs to get on a path to achieve its 2019 guidance of 360,000 to 400,000 cars. That doesn’t happen at the 63,000 sales rate in Q1: 63,000 x 4 = 252,000.

Such a path does not include Model 3 sales in Norway being down 82% and The Netherlands being down 76% thus far in April.

Disclosure: I am/we are short TSLA. I wrote this article myself, and it expresses my own opinions. I am not receiving compensation for it (other than from Seeking Alpha). I have no business relationship with any company whose stock is mentioned in this article.