For much of last year, Tesla (NASDAQ: TSLA) shares traded wel
l below the S&P 500. Some of the early drop was due to Elon Musk’s relationship with the new Trump administration and his leadership of The Department of Government Efficiency (DOGE), which tried to bring down costs of the federal government by massive cuts. Then, to make matters worse, Musk had a falling out with the president. There were boycotts around Tesla dealers and worries that the brand of the world’s most valuable car company was crippled.
A challenge just as large as the political one was the rise of local competition in China, and a frightening slide in Tesla sales in the EU. Even US sales weakened. In September, Tesla’s stock was still below its level a year ago.
As September turned to October, Tesla’s stock price recovered. There is no exact reason why today, Tesla’s stock is up 22% in the last year, while the S&P has only risen 15%.
The easy answer to why the stock moved up is that Musk had once again convinced investors that Tesla is a technology company, not a car company. Revenue from autonomous vehicles and robots is worth much more than EVs, which have become a commodity. However, the proof is thin. Musk’s Optimus report was no better than several others on the market. Autonomous vehicles were bogged down in the US, at least, by regulations and safety concerns. Tesla’s prospects for the next year, and perhaps beyond, dimmed.
What investors have not considered well is that Tesla is still the largest EV company in its home market. While EV sales have leveled off or even fallen in the last two quarters, most experts think the dip will be short-lived. People will still want cars that do not need gasoline, and a charging-station network that matches the number of American gas stations.
While Tesla’s market share in China weakened, China remains the world’s largest EV market. “Tesla and its supporters will point to the wholesale number, 69,129 units out of Giga Shanghai in January, up 9.3% year-over-year. That figure includes both domestic deliveries and exports,” according to Elektrek. Critics say becayse many of these were exported, this is not good news. The counterargument is that they were sold somewhere and did not simply sink into the ocean.
Being an EV company is not so bad.
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