THREE AREAS TROUBLING INVESTORS
  • Concerns that founder and CEO Elon Musk is distracted by Twitter
  • Demand could slow because big ticket purchases are vulnerable in a downturn
  • Mounting competition from EV specialists and traditional car manufacturers

From a current level of around 20 million, the IEA (International Energy Agency) estimates the global ‘park’ of electric vehicles will grow 18% per year to reach 350 million by 2030, making the market worth over $800 billion.


While deliveries last quarter may have marginally undershot its target, Tesla (TSLA:NASDAQ) is still the leading EV maker, but to maintain its pole position it needs to overcome supply bottlenecks, manage higher input prices and satisfy customer demand.

Competition is heating up and Shenzhen-based BYD (1211:HKG) has emerged as a serious contender thanks to its vertical integration which includes batteries, motors and chips.

After outselling Tesla in the Chinese market, BYD is now expanding production and sales and is aiming for four million units this year.

In terms of valuation, Elon Musk’s lack of leadership, as he sells shares to fund his Twitter takeover and continues his increasingly erratic leadership of the social media platform, has seriously damaged the share price as well as the firm’s brand equity and needs to be addressed.

As the Toronto Star recently put it, ‘if Tesla once seemed like the future of everything, a company led by a visionary that would usher in a new era of clean energy, it now seems like merely another car company, hardly “failing”, but ordinary just the same’.

In that scenario, even after losing over $700 billion last year the current market value of $380 billion still seems too high. Over the long term the shares have delivered strong returns – the 10-year total return totalling 5,520%.