![]() They are relinquishing EV market share and cutting prices, ergo profits, to stay competitive. However, Tesla’s share of the EV segment continues to plunge, hitting 50% in Q3, the lowest level on record and down from 62% in Q1.īottom line: Tesla is losing its competitive advantage. The price cuts have helped, as Tesla’s Q3 sales grew by 19.5% year over year, surpassing the industry’s overall growth rate of 16.3%. In an attempt to increase sales volume, Tesla slashed prices, which are now down roughly 25% year over year. Almost every auto manufacturer, and a few new ones like Rivian and Fisker, now manufactures EV cars, as shown in the graph below, courtesy of Cox Automotive.įurther, consider the following paragraph from Cox Automotive:ĮV transaction prices in Q3 were down significantly from 2022. Not only were Tesla investors projecting that Tesla would be the largest automaker, but also that some of their other ventures, like energy generation and robo-taxis would do fabulously well. Tesla Doesn’t Have a Monopoly AnymoreĪt one point, Tesla’s market cap was almost equal to that of the entire auto industry. More car buyers will likely shift from ICE to EV, but that transition will be slower than it has been for the more eager first adapters. The market for EVs among early adapters and wealthier, environmentally concerned consumers is starting to get saturated. NADA estimates an EV owner will save approximately $5,000 in gas and a few hundred dollars in maintenance costs over five years versus an ICE owner. The obvious benefit for EV owners is fuel costs. Lithium-ion batteries can catch fire in an accident and on rare occasions when they are not in use.EVs have higher insurance and financing costs.EV batteries are less efficient in severe temperatures.EVs lose an average of $43,515 in value ICE vehicles depreciate by $27,883. Per the National Automobile Dealers Association (NADA)- The final cost of the vehicle is its depreciation at resell, the difference between what the consumer paid for it and its worth after five years of ownership.Consequently, “range anxiety,” or the fear of running out of power at the wrong time or location, is a concern. The time to “fill up” an EV is much longer than an ICE car, and the EV recharging infrastructure is inadequate in many places.Kelley Blue Book claims the five-year cost to own EVs versus ICE vehicles is 15% higher. ![]() Fewer EV cars are eligible for Federal tax credits. ![]() There are a few drawbacks affecting the uptake of EVs. While the transition from internal combustion engines (ICE) to electric is sure to continue, its pace appears to be moderating. follows the path of other countries like Germany and China, in which EVs represent approximately a third of all new car sales. That leaves plenty of upside for EV manufacturers if the U.S. The latest data shows that EVs will account for 9% of all domestic new car sales in 2024. With a price-to-earnings ratio of 9 for Toyota and 72 for Tesla, the answers to our questions have critical implications for shareholders of both stocks. What if one or more of those do not occur? Might hybrids be the preferred technology until a more efficient battery evolves? Will EV competition from established and new auto manufacturers upend Tesla’s market share? Maybe most critical, could Toyota, not Tesla, be at the forefront of a significant technological advance for automobiles? Tesla’s market cap relies on all three coming to fruition. Tesla shares have outperformed Toyota’s and the market because of the significant growth of EVs, a robust outlook for EV market penetration, and forecasts that Tesla will maintain its lead role in manufacturing EVs. ![]()
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