NEW YORK (TheStreet) -- That was fast! It took only three months.
On the fourth month of BMW selling its all-new, from-the-ground-up electric car, the numbers show sales of BMW's i3 are 70% higher than Tesla's (TSLA) in the U.S. market. According to industry authority insideevs' best estimates, Tesla sold 600 cars in the U.S. in August compared to BMW i3 sales of 1,025.
Part of this story is not just BMW's sharp increase in electric car sales but Tesla's spectacular collapse in U.S. sales this year. Tesla's August number represented a 54% decline over last year.
Tesla's U.S. sales collapse was even worse in July -- a 72% decline from last year. What about the first half of 2014 as a whole? Tesla's U.S. sales fell from 10,050 cars in 2013 to 7,400 in 2014. That's a 26% decline.
Over the last year Tesla has been shipping more cars abroad, preventing overall sales from declining. First, it was Norway, then Holland, then Norway again. Now it's going to be China this quarter. We shall see how that goes.
Actually, now that I think of it, let's look at some of those international sales numbers, to the extent that they are available since Tesla does not disclose monthly figures. Let's start with Tesla's flagship country, Norway. Tesla sold 183 cars there in August, but BMW has passed Tesla there, too, with sales of 202.
Meanwhile, in some other European countries, according to their monthly auto registration statistics, Tesla's August sales numbers practically round to zero:
If Tesla's spectacular sales collapse in 2014 doesn't reverse itself dramatically in September and beyond, it will miss this year's 35,000-unit sales guidance.
Typically, in an extreme momentum story where the multiples paid for the stock are on the order of 10 times greater than the best of the competition, one expects that only massive beats/raises will do in order to keep the stock at a premium multiple. One does not look at U.S. sales declines of 54%, 72% and 26% (August, July and first half 2014) and say "Wow, this company is really growing fast!"
Look at the percentages again: 54%, 72% and 26%. These are sales declines, not increases.
I'm unaware of another automaker whose sales are falling as rapidly as Tesla's in the U.S. market. Many people made fun of me when I wrote a month ago that Dodge is crushing Tesla, but in today's U.S. sales report Chrysler overall reported being up 20% in August and 14% for the year to date.
Chrysler's Jeep brand was up a whopping 49% in August and 45% year to date. Up 49% sure beats being down 54%, as Tesla was. Jeep sold 68,766 cars in the U.S. in August, or over 100 times as many as Tesla sold. By that token, shouldn't Jeep's market cap be at least 100 times as large as Tesla's?
Let's do that exercise for the moment. Tesla's fully diluted market cap, based on 142 million shares, is $40 billion. Jeep sells 100 times more cars than Tesla in August. Multiply $40 billion by 100 and you have $4 trillion, or almost 25% of the entire U.S. GDP. By that calculation, Jeep would be the largest company in the world by a factor of approximately 10 times.
We all understand that we pay premium multiples for premium growth stories. Facebook (FB) , Google (GOOGL) , Salesforce (CRM) -- they have high multiples, but they're based on high growth rates. However, in Tesla's case it looks like the U.S. sales growth is outright negative -- minus 54% in August, minus 72% in July, and minus 26% for the first half of 2014.
Here is a prediction: With these spectacular sales declines, there comes a need for Tesla to soon raise more money again. I believe we won't have to wait long until Tesla taps the capital markets for additional funds to plug its cash burn. Alternatively, Tesla has to start taking deposits for its future Model 3 car (expected in 2017) to cover its cash needs.
Look at the numbers, folks.
At the time of publication, the author was long FB and GOOGL, although positions may change at any time.
This article is commentary by an independent contributor, separate from TheStreet's regular news coverage.
TheStreet Ratings team rates TESLA MOTORS INC as a Hold with a ratings score of C-. TheStreet Ratings Team has this to say about their recommendation:
"We rate TESLA MOTORS INC (TSLA) a HOLD. The primary factors that have impacted our rating are mixed ? some indicating strength, some showing weaknesses, with little evidence to justify the expectation of either a positive or negative performance for this stock relative to most other stocks. The company's strengths can be seen in multiple areas, such as its robust revenue growth, solid stock price performance and good cash flow from operations. However, as a counter to these strengths, we also find weaknesses including unimpressive growth in net income, poor profit margins and generally higher debt management risk." You can view the full analysis from the report here: TSLA Ratings Report