Tesla is the world leader in electric vehicles, but that does not mean that it is all milk and honey. The company is under pressure in China, as there are better opportunities from other automakers in the industry.
The Swiss bank has cut their price target on Tesla from $730 to $660 – that’s by 10%. There are also delays when it comes to Tesla’s self-driving product and the launch of the Model Y in Europe.
Patrick Hummel, the analyst, stated that “Our key concern shorter-term is that Tesla’s demand momentum in China is slowing, and our checks on the ground suggest that BEVs [Battery Electric Vehicles] from domestic brands are gaining further ground vs. Tesla, which may trigger additional pricing action by Tesla and consequently lower gross margins.” Tesla’s long-term growth will probably be affected by competitors with high range from China.
The biggest competitors are Nio, BYD, and XPeng, which have all shown growth in the last years. And now that most of the major automakers in the industry are all in for electric vehicles, the competition is on. There are four factors that can lead to outperformance in auto stocks: a strong EV sales curve, a sugar-coated portfolio value, segmented exposure, and the capacity to convey higher commodity prices.
Hyundai is another company that could appear as one of the best re-rating stories in the industry. Renault and Li Auto are in the first five most-favoured EV stocks. The target price on Ford raised. The EV adoption is fastly increasing. 43% of consumers will consider buying a fully electric car – that is up from 37% in 2020.
People start to prefer fully electric vehicles instead of plug-in hybrids. The EVs will make up 20% of the car market around the world by 2025. By 2030 – 50%.
Tesla is still the leader, without any doubt – but for how long?