Tesla Needs Roadside Assistance as Registrations Break Down in Europe

News broke quite early on Tuesday morning. Apparently, June registrations for Tesla TSLA electric vehicles fell 61.6% year over year across Denmark to just 1,282 units. This was a nation where Tesla cars had been catching on and was thought to be a location where the electric vehicle maker had built up some momentum. A short while later, Sweden said, "hold my beer" and posted a month of June that reflected a year-over-year drop of 64.4% in registrations for Tesla vehicles. This followed May in which registrations across the European Union as a whole had dropped 40.5% to a mere 8,729 units.

By Tuesday afternoon, Bloomberg News among other outlets, was reporting that the CEO of Tesla, Elon Musk himself, has assumed oversight of the company's sales across Europe and the U.S. following the departure of long-time Tesla loyalist and Musk confidant Omead Afshar. Afshar had announced last week that he would be leaving the Tesla. This was just the latest in a long line of executive-level departures. Tom Zhu, who is a senior vice president and based in China, will oversee sales across Asia as he had already been doing and will also now oversee global manufacturing operations.

Stumble Some More...

Tesla shares took a 5.3% hit on Tuesday as Musk and Pres. Trump returned to their bickering ways using social media as a means of expression. Musk had openly complained about the fiscal imbalances still present within the "big beautiful" bill and had implied that there was a necessity for a third strong political party in the U.S. The president returned fire, posting: "Elon may get more subsidy than any human being in history, by far, and without subsidies, Elon would probably have to close up shop and head home to South Africa."

The fear for Musk and for investors is that certain aspects of the bill that has now passed in the Senate and has been sent back to the House before it can be signed into law, will harm Tesla's solar and battery businesses in addition to its auto business. Think tank Energy Innovation has estimated that without the subsidies that could be stripped by this bill, U.S. EV sales could drop by a rough 100,000 vehicles per year over ten years.

Better News, Sort Of

Early on Wednesday morning, Tesla reported June vehicle sales across China of 71,599 units, which was good enough for a 0.8% year over year increase. This ended what had been an eight-month long sales slump for Tesla in that nation. That said, the competition in China continues to gain on the historical industry leader. BYD BYDDY, a Chinese manufacturer delivered 382,585 vehicles globally in June, which was good enough for year over year growth of 10.5%. Other Chinese EV sellers also did well. Though the numbers are smaller, NIO NIO reported 17.5% sales growth in June, while Xpeng XPEV posted growth of 224%.

Deliveries

The numbers we have all been waiting on have finally been released. Tesla reported having delivered 384,122 electric vehicles during the second quarter of the year. This was down 14% from the year-ago comparison. This was a slight miss, as according to FactSet, Wall Street was looking for something more like 387,000.

Of those vehicles, 373,728 were of the Model 3 and Model Y varieties, while just 10,394 were of other vehicle types including the beleaguered Cybertruck. This came on top of a first quarter where deliveries had been down 13% year over year. Total production for the quarter landed at 410,244 vehicles, which was down small from the year ago comp.

Robotaxi

The company's future success probably lies in how quickly and how well it can execute and sell its strategy to turn its "robotaxi" service, currently operating in a limited capacity in Austin, Texas to the public. Then it becomes a matter of eventually selling it to trucking companies and bus lines. Still, there is competition in this space as well. Alphabet's GOOGL Waymo is operating in limited capacity in both Austin, Texas and Atlanta, Georgia and Alphabet is working with Uber Technologies UBER to develop this service.

Chart Fails​

​I showed readers this chart last week when it appeared that after a Double Bottom pattern of bullish reversal that worked like a charm, the shares had developed a closing pattern that had appeared to launch (on June 23rd) the stock to the upside. I mentioned in that note that the stock's daily Moving Average Convergence Divergence was moving toward a bullish posture.

Within that indicator, the histogram of the 9-day exponential moving average was close to moving above zero, while the 12-day exponential moving average was also close to crossing above the 26-day EMA with both in positive territory. I wrote that if Tesla experienced both of those moves, coming off of the 21-day EMA as a pivot, that my model could show a target price of $388.

That is not how things went down. Since last week, the stock has failed to hold its 21-day EMA, which was key to that target. The stock then failed to hold both its 50-day and 200-day simple moving averages, despite producing a "golden cross." That forces portfolio managers to reduce long-side exposure. Bulls need this morning's rally to retake those moving averages. So far, they are looking more like resistance.

The daily moving average convergence divergence is also an anchor tied around the ankles of this stock. The histogram of the 9-day EMA is more negative now than it was last week. The 12-day EMA, while also in negative territory, is now also further away from crossing over the 26-day EMA. That crossover is required for a significant rally. The 21-day EMA remains the upside pivot, but now the bulls have to worry about a potential new post June 5th low, which would be around $273. Traders are probably better off playing volatility in this name through the use of short to medium term options that investors are (my opinion) in taking a stand using equity.

At the time of publication, Guilfoyle had no position in any security mentioned.