Tesla (TSLA) shares have more than doubled this year, but does the EV maker’s stock fundamentals hold up or is it an investment based on faith in the company? The company is facing increasing competition from Chinese EV automaker BYD (BYDDF) and the upcoming release of its Cybertruck has yet to be announced. Yahoo Finance Tech Reporter Allie Garfinkle breaks down the playbook for Tesla.
Video Transcript
AKIKO FUJITA: Yahoo Finance is taking a closer look at the Magnificent Seven and what investors should keep in mind with the biggest names in tech?
Today, the focus turns to Tesla. It’s up over 100% on the year. The EV maker has no– shown no signs of slowing down, but as friend of the program, Steve Sosnick asks, should we be more concerned about Tesla’s present and near-term rather than its long-term future?
Let’s bring in Yahoo Finance’s Allie Garfinkle for more on what investors should be focused on for Tesla. Allie.
ALLIE GARFINKLE: Akiko, Tesla has never been just about Tesla, right? Tesla has been about futurism. It’s been about fear of climate change. And it’s been about, , well, faith. Steve Sosnick and I were actually talking and he literally called it a faith-based stock.
Now that being said, I want to push that faith aside. I even want to push Elon Musk aside for a moment and talk about some of the fundamentals we’re really seeing in Tesla, especially when it comes to the near-term.
Now some things to think about include increasing competition. Tesla’s competition is really gaining traction, right? You, of course, have competition in the US– think GM or Ford, which both saw EV sales growth this year. But I want to think even bigger than that.
You out there, I want you to think bigger because think about Chinese car company BYD, which surpassed Tesla this year as the top selling EV in the world. Now, we may have not heard of it here in the US, but that’s because their growth is coming from so many other places. They’re targeting South America. They’re targeting Africa. They’re targeting the Middle East.
BYD is also reportedly sets its sights on India, already has an assembly plant there. And we know that’s an area Tesla is interested in.
The other thing to consider here for the near-term at least are Cybertruck concerns. Now, if it feels like we’ve been talking about the Cybertruck for forever. It’s because it’s been a couple of years. The Cybertruck was announced in 2019, but it’s still fundamentally is a concept car. Production, right, has been pushed back two years from its original date. And there are still even problems. Musk himself reportedly is concerned about the design and execution.
Now, imagine the Cybertruck with me for a moment. You’ve got those misaligned doors. You have those uneven surfaces. And that really can become an engineering nightmare. So there are talks even of a possible redesign of this car that has already been in production for so long.
The clock fundamentally, I would say on the Cybertruck, is ticking. Because remember, again, nothing at Tesla is ever exactly what it seems. The Cybertruck is sure about the truck. It’s also about Tesla really grabbing its piece of the pickup truck market. But even more so it’s about Tesla doing something it hasn’t done in a while, which is show us something new.
AKIKO FUJITA: So what does it mean for Tesla in the long term, Allie?
ALLIE GARFINKLE: It’s a good question, Akiko, because there’s a lot of on one hand and on the other hand thing I’m about to do here. Because on one hand, there is some delivery growth from Tesla, right? Last quarter, quarter over quarter, 10% delivery growth. And analysts say that that’s a win, but it also ties back to discounting, for example. That’s where a lot of that growth is coming from.
And remember, Tesla has scaled incredibly quickly, but they’ve also done a lot of recalls to that effect, right? They recalled 4 million cars since January 2022. On one hand, they have this maturing supercharger network, this battery operation that really is going to provide some longevity, but also they really don’t have a secondary market that makes repairs easier.
So I’d say in the end, Tesla isn’t in a bad place exactly. It’s definitely in a weird one, though. I’d say it has both the traits of this maturing company and this growing company. It’s going to take some time for that transition to really iron out.