Tesla (TSLA) Vs Nikola (NKLA) Comparison By ARK Invest's Cathie Wood

ARK Invest’s Cathie Wood compared Tesla (TSLA) and its proposed rival Nikola (NKLA) recently. Wood explained why ARK Invest had little to no faith in NKLA’s plans for the future and how it really could not be compared to TSLA. 

Tesla became the world’s most valuable automaker on June 10th with a market cap of US$184 billion. On June 29th, Tesla celebrated the 10th anniversary of its IPO launch. As noted by the CNBC host, Tesla shares were US$17 when it launched its IPO, and a decade later, it was close to US$1,000 per share.

When asked about TSLA when it first launched its IPO and NKLA, Cathie Wood said the main difference lied in the companies’ core technology. The ARK Invest CEO explained her thesis by comparing the costs of the Tesla Semi and Nikola’s Class 8 truck. 

“I think the biggest difference is the right technology. We did a white sheet of paper research at the beginning of ARK and just mapped out what an electric vehicle cost decline would look like versus a hydrogen. And as we were doing that research, we realized that the infrastructure alone for hydrogen fueling stations is going to be 5 to 10 times as expensive as the infrastructure for electric,” Wood explained to CNBC’s Fast Money host.

She elaborated further, saying: “And then from the consumer’s point of view, it is going to cost roughly 3 times as much—this is a 700,000-mile truck lease—and if you tally up the cost to the trucker for the hydrogen, it would be 3 times as much as the cost would be for electricity. So the technology is what Tesla got right.”

In a separate interview with CNBC, ARK Invest analyst Tasha Keeney stated that Tesla had at least a three or four-year software advantage over legacy automakers. Nikola will have to contend with Tesla’s software lead as well to get a chunk out of the trucking market. 

“@Tesla is really the only automaker that’s successfully enabled over-the-air updates … They have an amazing software advantage over everyone else … We think #Tesla still has a 3-4 year lead…”—@TashaARK 🚘🤖🔋 https://t.co/033S0JmycG $TSLA #EV #AV #OTAsince2012 @elonmusk pic.twitter.com/UsqTfALOdG

— Tesla New York (@TeslaNY) June 28, 2020

But Nikola isn’t just meeting Tesla head-to-head in the Class 8 market. It will also be competing with TSLA in the pickup truck segment. On the same day TSLA IPO marked its 10th anniversary, NKLA started taking preorders for its new energy pickup truck, the Badger. 

Nikola’s CEO Trevor Milton described the Badger, stating: “It’s the coolest—electric truck—pickup truck the world’s ever seen.” According to Milton, reservation holders can switch from BEV or FCEV (fuel cell electric vehicle or hydrogen-powered) and vice versa for free until their order enters the assembly stage. 

Nikola’s Badger will compete with the Tesla Cybertruck. While both NKLA and TSLA have not started volume production of their respective pickup trucks, it is evident that Tesla is in the lead. As CNBC’s Fast Money host pointed out, no one as actually seen Nikola’s Badger while the Cybertruck has been spotted in the wild several times, featured in several televised videos, including Jay Leno’s Garage, and more. 

Also, Tesla already started looking for a location to build its Cybertruck Gigafactory or Terafactory. Meanwhile, Nikola’s production plans for the Badger are not set in stone just yet, and the same could be said for its Class 8 truck. The first hurdle that NKLA will have to face, though, would be to present a working version of any of its vehicles. 

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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 share 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.