The future of Tesla
Image: Getty
Over the past ten years, Tesla stock has grown 8,535%, compared to the 349% and 188% returns produced by the Nasdaq and the S&P 500, respectively, during that same period. But competition in the EV space is heating up – and the Elon Musk-led automaker is feeling the pressure.
Tesla shares fell more than 12% yesterday to reach their lowest price since August 2020, in the first trading day after the company reported Q4 sales that missed analysts’ expectations.
🚘 A deeper dive… Tesla delivered a total of 1.31 million vehicles in 2022, representing a 40% increase from the previous year. And while that may seem like a high rate of growth, it actually fell short of the company’s multi-year goal of averaging 50% annual growth in vehicle deliveries. For context, Toyota delivered 10.5 million vehicles – electric or otherwise – in 2021, while Ford delivered 3.9 million and GM delivered 2.2 million.
But when it comes to just EVs, Tesla currently controls 65% of the US market. Though that’s down from 70% in 2021, and 79% the previous year.
And its US market share could decrease even further; competition isn’t exactly getting less stiff. The number of EV models available in America nearly doubled last year from 62 to 100, and is expected to reach 134 by next year.
- Globally, it’s more of the same. Tesla’s growth has slowed sharply, especially in China, the world's largest EV market, where it faces fast-growing rivals, Reuters reports.
📉 Zoom out: Over the past year, Tesla shares have fallen nearly 73% – losing more in market cap than the next 10 largest automakers are currently worth combined. Its stock closed yesterday trading around $108, down from $300+ as recently as mid-September (which was juuust before Musk re-submitted his offer to purchase Twitter).
As for where it goes from here – that’s anyone’s guess.
📊 Flash poll: Are you bullish (confident) or bearish (pessimistic) about Tesla’s future over the next ten years?
See a 360° view of what media pundits are saying →
Sprinkles from those bullish on Tesla
- Some commentators argue that the recent decline in Tesla’s stock represents a once-in-a-decade buying opportunity for investors, as the company still posted an industry-leading operating margin in Q3.
- Others contend that the long-term outlook for Tesla is still intact, and predict the EV company will eventually deliver 5+ million vehicles within the next decade.
- “Down 72%, Is Tesla Stock a Once-in-a-Decade Buying Opportunity Right Now?” –Trevor Jennewine, The Motley Fool
- “Tesla’s Earnings Show Sequential Margin Improvement; Stock Slightly Undervalued” –Seth Goldstein, Morningstar
- “Tesla: Shares Dropping Like A Stone - Now A Bargain” –Cavenagh Research
Sprinkles from those bearish on Tesla
- Some commentators argue that Tesla has long been way overvalued as a stock, and its decline over the past year is merely the company’s valuation coming back down to earth after being unreasonably high for an extended period.
- Others contend that Tesla shares will continue to slide as long as Elon Musk remains CEO, both due to his distractions from running other companies and his recent behavior on social media.
- “Did the Tesla Story Ever Make Sense?” –Paul Krugman, NY Times
- “With Elon Musk Out of Control, Tesla Needs Adult Supervision” –Mark Gongloff, Bloomberg
- “Stop Trusting Elon Musk—on Tunnels, on Teslas, on Everything” –James Brasuell, Planetizen
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