The electric vehicle industry is maturing at the expense of Tesla
Stocks
January 16, 2023
On a scale of 1-10, how mad would you be if you could’ve bought the same car for $13K cheaper?
We’d be a raging 10. That’s how these people must be feeling…
In China, hundreds of Tesla owners took their frustration to showrooms demanding rebates.
US Tesla buyers are also feeling “duped” after Tesla lowered their US car prices by as much as 20%.
So much for Tesla’s original “no-discount” policy. In December, Tesla already reduced prices in the US by $7.5K — which analysts saw as weakening demand.
The price cut could be a move to boost sales — but it will impact Tesla’s profit margins which have been traditionally higher than other carmakers.
- Tesla has missed delivery targets in each of the last three quarters.
- Sales will only grow 40% in 2022 — missing their 50% annual sales growth target.
If it moves like a car and honks like a car…
Then it’s probably a car, right? Well, that wasn’t how investors treated Tesla.
- For years, Tesla’s valuation was significantly greater than other carmakers, given its higher growth prospects and profit margins.
- With competitors catching up and expansion slowing, investors are waking up to a new reality — one where $TSLA is being treated like other carmakers.
That’s led to a nearly 70% hit in its stock.
With Tesla’s price-to-earnings ratio still 4-6x higher than traditional carmakers, any further declines in growth or profitability could have significant consequences.
