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“Tesla (TSLA) continues to gain market share in China and around the rest of the world,” said ARK Invest analyst Sam Korus. TSLA’s stock price closed at US$1,497.06 on Monday and may rise 3.81% to US$1,554.13 according to premarket estimates as of this writing. Tesla’s market cap is now US$277.667 billion.
Some analysts and TSLA skeptics wonder if Tesla will be able to maintain its valuation as legacy automakers release electric vehicles of their own into the market. For now, it seems that Tesla’s market share in the EV market is growing, despite the ongoing pandemic.
“During the first half of 2020, Tesla’s market share of battery electric vehicles in China reached 21%, up from 6% for the year in 2019 and 2% in 2018... It appears that concerns about Tesla’s ability to sell lower-end cars in China have been misplaced,” wrote Sam Korus in the ARK Invest Newsletter.
Barclay’s Brian Johnson noted last week that TSLA’s label as a growth stock should be measured through metrics, like same-country, same-model sales and comparisons between quarters over time. Korus’ research hints that Tesla’s market share is growing, specifically for the Model 3.
Wedbush analyst Daniel Ives estimated that Tesla China could add US$400 to TSLA’s stock price on its own. Tesla China seems poised to grow even more within the next couple of months.
Since the beginning of Q3, Giga Shanghai has ramped production, manufacturing more than 4,000 vehicles per week. It has two shifts now as well, which could expedite output even further. Tesla China's Global VP Grace Tao recently met with Chongqing Liangjiang New District Committee members to discuss a new project which could help boost Giga Shanghai's financial results in the future.
Tesla’s market share in the EV market around the world is growing as well. Korus wrote: “On a global basis during the first half of the year through May, Tesla’s market share increased roughly 300 basis points from 23% on average in 2019 to 26%... While many investors used to ask what will happen to Tesla when traditional automakers start making and selling electric vehicles, ARK now wonders how high Tesla’s market share will go, a remarkable turn given that our base case assumption is in the opposite direction, 19%, for 2024.”
Multiple legacy automakers have announced the release of battery electric vehicles (BEVs) before the pandemic. However, COVID-19 might have forced some of the OEMs to push the release of their BEVs back, given the current economic straits most legacy automakers are facing.
Even if legacy automakers were to release electric vehicles sooner rather than later, however, Loup Ventures found two critical flaws in their BEVs that could keep Tesla in the lead. “The majority of these new models suffer from one of two critical flaws: starting prices above $70,000 and/or ranges below 225 miles. These two flaws rule out most EVs as mainstream options. In our view, mainstream options are priced below $40,000 with a range above 225 miles,” said the analysts from Loup Ventures.
By the time legacy automakers release their own BEVs into the market, Tesla would have already refined Model Y production and perfected Model 3 production—its two most affordable options right now. And by 2021, Tesla would be working on ramping Cybertruck production, yet another affordable vehicle.
At this point, it seems legacy automakers are playing catch-up with Tesla. But Tesla isn’t resting on its laurels either. Traditional OEMs might have a hard time bridging the gap between themselves and a target that is continuously innovating.
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This article is for informational purposes only. You should not construe any such information or other material as an investment, financial, or other advice. Nothing contained in this article constitutes a solicitation, recommendation, endorsement, or offer by Ma. Claribelle Deveza, Tesmanian, or any third party service provider to buy or sell any securities or other financial instruments in this or in any other jurisdiction in which such solicitation or offer would be unlawful under the securities laws of such jurisdiction.
Ma. Claribelle Deveza holds zero shares of Tesla, Inc., and currently (at the time of this article's publishing) holds zero options or securities in Tesla Inc. and/or its affiliates.