TSLA - So Many Headwinds Is Tesla Toast?
2024-04-19 13:28:31 ET
Summary
- Tesla, Inc. is facing a host of obstacles with EV market growth down significantly, competition increasing, market share declining and pricing pressures.
- Increasing competition from China, rising trade tensions and brand problems add to the complicated picture.
- Vigorous growth is unlikely to return anytime soon, and share valuation is still in premium territory. With few catalysts in sight, we would invest elsewhere until the outlook improves.
While it is an exaggeration to argue that the wheels have come off Tesla, Inc. ( TSLA ) the electric vehicle, or EV, pioneer, it's certainly true that the shine has come off:
Although the company has regained the crown of being the biggest EV producer in the world from BYD Company Limited ( BYDDF ) in Q1, which it had lost in Q4/23, this looks like only a reprieve to us as we argued in our article about BYD .
In any case, whether Tesla's the biggest producer or not, the steep decline in growth from 90% three years ago to growth coming to a screeching halt and then going into reverse in Q1/24 (which isn't in the graph above) with a whopping 20% revenue decline isn't inspiring as the company faces a number of problems and threats:
- Market saturation by first adopters.
- Difficult transition to mass-market products.
- No new models.
- Price competition.
- The rise of Chinese competition.
- Geopolitical and trade tensions.
- Fuel economy regulation.
- Lack of charging infrastructure.