Hey guys, it's Sasha Tesla stock is down three percent this morning after news broke that Giga Shanghai is going to start slowing production down from next week according to online sources, Giga Shanghai is going to cut production by more than 20 from the previous month according to Reuters a separate story from Bloomberg and a bunch of other sources all apparently with Insider information and naturally enough, the market is panicking. Tesla stock is already down by more than 50 so far this year and was below 170 dollars two weeks ago. and here again, we have apparently got a massive problem. According to all of these reports, Tesla's demand has collapsed.

So is the Tesla Gray Story over is Tesla stock finally going to stop being so ridiculously overvalued, because as you well know, Tesla is worth more than the next 69 biggest car companies combined or is something else may be going on. And if so, what is it? Well, the story with a collapsing demand for Tesla does have some legs, because if you look at the Tesla's website, the wait times for new orders have fallen sharply around the world. Wait times for the Model Y long range in the USA December to March and the model-wide performance says December so you can go and get one right away without having to wait at all. And not only that, but you can now go and buy a brand new car from the inventory, something that was impossible a few weeks ago.

Look, if you stick in a New York ZIP code, you have 43 cars available. Stick in: Beverly Hills there's 72 cars Chicago has 22 cars. so unless you live in North Dakota there's probably a brand new Tesla car within 200 miles for you to pick up right now. And given the Giga Texas are still in the early stages of ramping production, there is naturally some concern because it was impossible to find cars in the inventory just a few weeks ago.

and it's much the same story when you begin looking at other markets around the world. The basic rear-wheel drive model in the UK is available in just two to four weeks. The long range says January to March and the performances are also just two to four weeks. You can tell which ones are coming from Berlin and which ones are still coming over from Shanghai because the the ships from Shanghai take at least a month to sail across.

Now in the UK, there are 250 model wise in the inventory and 150 model 3s. so if you want to buy a brand new Tesla, you can go and pick one up pretty much today. there's probably one matching the spec that you're looking for in Germany. The basic model Y is available from February to March.

The long range is January to March. the performances also January to March so you're not long to wait at all in general across Europe though you do have to wait because there is no inventory available to choose from. and in China whichever version of the model where you want, you can have it in December. So the obvious question is has Tesla hit a demand wall and there are only so many people in the world who want to buy a Tesla.

According to all of these sources, so many people who can buy a Tesla because you know it's an expensive car. And that probably is the case because Tesla's cars do sell at relatively high prices and we are in the middle of a global cost of living crisis as inflation is running right and real wages are dropping and in the last few days Tesla announced the Semi, a groundbreaking truck that can pull the maximum allowed legal load for 500 miles which suddenly makes that truck incredibly compelling as a proposition and first deliveries were made last week to Pepsi. The issue with the truck is that Global Truck Sale volumes are just not all that high, and even if Tesla does end up taking a big chunk of the market over time, it is not as big an opportunity as their other products, and there are question marks as to whether the existing space in Nevada is even big enough for a large-scale production run of the Semi or whether a new facility will have to be built to get to actual scale. Because if that's the case, that's going to add another two to three years to the timeline.

But going back to the demand issue, the Chinese passenger car Association Just published data this morning for sales in China for the month of November and Tesla managed to sell over 100 000 cars in November absolutely smashing the previous record which was 83 000 back in September. Now remember that the word sale here is somewhat loose, and every car that gets loaded onto a ship out of China is considered a sale in this data the moment it is on that ship. and also remember that from October Tesla stopped optimizing production flow to maximize the numbers of deliveries for every quarter. So in October Tesla made 87.7 000 cars in China but only delivered 71.7 000 of them.

So 16 000 cars were hanging over from October to November. So the sales in November from November are probably more like 84 000, which is still huge because it is still more than any previous month from that factory. And the reason Tesla production in Shanghai has been exploding recently is because they installed two major upgrades in the factory over the summer and are now ramping production on those upgraded production lines. But let's look a bit deeper at this problem with demand.

This morning, the Society of motor manufacturers and Traders in the UK published their data on car sold in November and you can see that the Tesla Model y was the second most popular car clocking in at 4229 sales At the same time, if you look at the detailed data, Tesla as a brand sold a total of 6 000 cars I'm guessing most of the differences model 3 so about 1800 of them sold and Tesla sales in November were up 95.8 compared to November last year. a pretty nifty rate of growth. So the 400 cars available in the inventory in the UK for the model 3 and the Model Y are less than seven percent of the total number of cars at Tesla sells per month in the UK. So roughly speaking, about two days worth of sales and the question then becomes is the inventory a sign that there is no demand or is it just a much better business strategy because you can see that Tesla It seems to be doing just fine with the Man in the UK despite the Model Y being by far the most expensive car in that top 10 list.

And as sale volumes grow, Tesla begins having the luxury of being able to import cars without having to wait for the order to come through. This is really important when your sale volumes are low. You run the risk of importing a card that will then sit around for months because there isn't a buyer who is interested in that specific configuration. But here is the order page for Tesla in the UK There are three different versions of the model Y and you can see that there are five paint options, two interior options, an option for a tow hitch, and two wheel choices except for the performance model which only has one.

So for the Model Y, there are 100 different potential combinations five times, two times, two times, two for the rear wheel drive in the long range, which is 40 and half that for the performance because of that one choice of wheel. So the beauty here is that as your production scales, you can start taking advantage of stopping making cars to order and just manufacturing every combination and shipping those cars over knowing that each of those cars is going to sell anyway. This way, you can set a refractory to be way more optimal instead of having to Mark exactly which car is being produced for which customer, in which country, loading it onto the right ship, you can go and make longer continuous runs of exactly the same setup, massively increasing production speed, which incidentally could let you go and produce a record number of cars in the Shanghai Factory in November. For example, if you look at the inventory numbers, there is still no inventory available in many countries.

In Europe Berlin production is currently ramping, but is not fast enough yet. In the UK, the inventory is only a very small fraction of the monthly sales. In the US, the inventory is an even smaller fraction of the monthly sales. But the thing with inventory is that it creates a vicious cycle once cars are available in the inventory in every possible configuration that somebody might want it.

There isn't really a demand for people to place orders because if you want to go and buy a particular car, it is available within the inventory so you can go and purchase it while Tesla is making more cars to backfill the inventory on ships that keep arriving every single month. That is a really interesting point that it happened. really seen anyone mention because as the way times collapse, it does not necessarily mean that anything is happening with the demand at all. Now looking at the numbers: Giga Shanghai delivered 72 000 cars in October and 100 000 cars in November Fremont is probably on track for hitting 150 000 cars in Q4 according to drive Tesla The Berlin factory set a new record of 550 cars made in one day last week, and apparently they are planning to start running a third shift before the end of this year, which will increase production even more.

So we may be looking at 40 000 cars from a billion in Q4, possibly more and Austin is also probably not too far behind. So even if if this rumor about the Shanghai slowdown is true and Shanghai does go and make 20 less cars in December than in November and in November remember, it sounds like they made about 84 000, then we're still looking at a Q4 total of about 460 000 cars, which is way above the current Wall Street expectations. Obviously a massive new record for Tesla, but the real question is why would Giga Shanghai slow down their production? Europe is still having wait times of a few months Australia and New Zealand have even longer wait times. There are still many countries where you cannot buy a Tesla which can be opened up to increase the total addressable market.

And remember, the demand in the US from January is likely to increase significantly because in the next few weeks we're going to find out what the official list of cars is with their relevant discounts due to the Inflation Reduction act and Tesla cars seem to meet every requirement on the Outsourcing and production and raw materials certainly more so than pretty much any of their competitors. So Americans buying Teslas next month May well be looking at getting a seven and a half thousand dollar rebate on their taxes. A pretty nifty incentive if production in December is going to be lower in Shanghai. There can also be about a million other reasons why.

remember: China is still busy implementing their zero covert policy and there have been recent protest in Shanghai I Don't know if there is any advance plans on any kind of lockdowns that may potentially turn up I Also, don't know if there's any tooling or upgrades to the production line in the factory being made like what we saw happen in the summer. There is also a growing Rumor Mill of a refresh coming for the model 3. I Don't know if there will be work happening in anticipation of that or not. In any case, the numbers just don't lie.

wait times are down because production has increased and because the method of sale has also changed and is continuing to change. It's also down because of macroeconomic factors potentially, but the relationship between demand and wait times is not at all linear when you have cars available at short notice or in the inventory. demand for those cars increases significantly, and when you have cars available in the inventory, it takes away the need for customers to pre-order a car if they can get the exact car that they want right there, right then in the right spec because many people are just not in a position to wait several months for no particular reason for their new car to turn up and I spent about an hour working on this script since I first checked the UK inventory numbers and I then went back and looked again and three of the model wise that I was talking about that were on that list have now sold and interesting if fairy anecdotal bit of data from the information I'm looking at, it looks like Q4 numbers for Tesla are going to break some serious records including on revenue and profit. If Tesla does hit the 460 000 cars in Q4, we are probably going well over the 2 million car run rate starting from Q1 next year and next year production of the 4680 sales is going to continue to scale.

the Cyber truck is coming, Energy storage is going to continue to scale. Wait times on those, by the way, are insane. The Semi is going to slowly grow their production numbers. The Model 3 refresh is apparently coming.

The compact car is apparently coming. It sounds like we might finally hear about new Factory locations sooner rather than later. We have now had a wide release of FSD software which may be going outside the US at some point soon, which means more revenue is going to be coming from these adjacent streams. So from where I'm sat, it is an incredibly epic time to be a Tesla investor.

I am massively extremely excited for what the next few years are going to bring seem to be at odds with everybody else on that front, and I am dumbfounded by the fact that the share price right now is lower than it was in November 2020 over two years ago. Although I do hope genuinely that it stays that way for at least a little while so that I can use the opportunity to load up even more than I already have done. If you found this video useful, please don't forget to smash the like button for the YouTube algorithm. Thank you so much for watching I Really appreciate it and as always, I'll see you guys later.