Click here for the PDF: The Weekly Beacon June 23 2023

We will be giving some macro economic market updates on a weekly basis. No equity recommendations will be given in this commentary, and we encourage you to contact us if you have questions regarding any observations.

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This weeks issue: Pre-ordering, EV order book, Rivian, EV sale, Factory sale, Demand slump, Electric vehicles, Tesla, EV stocks, GM and Ford deal with Tesla, Charging stations, Tesla charging network, Migration patterns, Housing market, Soft home demand, Sentiment tracker, Fear and greed index, Streaming industry, Cable and streaming, Streaming becoming expensive, Netflix, Hulu, Mortgage rates, FED and interest rates, Gold purchases, Central Banks, BRICS, France and BRICS, BRICS vs. G7, Gold prices.


The pitfalls of pre-ordering

The auto industry has built up releases of special edition models and allowed consumers to pre-order them in advance for decades. The EV industry has continued this pre-order model. Many new-age EV producers have required deposits for ordering new cars which are used to assist and fund production. This has helped EV producers with production as they have only produced at the same rate as demand, decreasing the chances of inventory stacking up (or so they thought).

On Saturday night, Rivian hosted a one-day sale at its factory in Illinois. Rivian would not confirm how many vehicles they sold. Factory direct sales are also anything but typical for the auto industry. This sale shows consumers have canceled their orders and that Rivian was sitting on a large, unexpected inventory stockpile. The more options that consumers have when it comes to EVs, the more this will happen as consumers change their minds on what car they want and request a refund for their pre-ordered vehicle. Some companies charge a non-refundable deposit but some pre-orders in the EV industry remain refundable to consumers. Perhaps EV producers will change their tune on refunding order deposits.

This new way of producing and delivering vehicles could eventually present an inventory problem for EV producers, something that they have not dealt with before. Traditional automakers sit on billions in inventory on a rolling basis whereas Tesla is estimated to only be sitting on a few hundred cars that are unsold at any time.

It’s too early to say that there is an EV demand dilemma for any company in the industry. Even though Tesla has some inventory available to buy