Several automakers are betting big on the electric vehicle market with automaker Tesla dominating the US EV market.
During 2019 the amount of units sold in the US amounted to c. 246,000, with 193,000 units being Tesla manufactured autos. This is three times larger than all the remaining auto makers put together. Their best-selling car is the Tesla Model 3 (c.159,000 sold), with the next biggest seller being the Chevrolet Bolt as it sold ‘only’ c. 16,000 units.
Tesla shares have gone through a roller coaster ride in recent years, however, as the automaker managed to improve its production capabilities for the model 3, introduce other models, and expand to China, its share price surged somewhat with a year to date performance greater than 100 per cent.
During the past years, Tesla sceptics forewarned that there will be a collection of auto makers entering the long-range electric vehicle market. Insofar, there were a number of vehicles that were introduced, but neither one of them managed to make inroads in the EV market. More rivals are on the horizon, as the incumbents set the stage for EV domination.
The unrivalled parallels for Tesla are set mainly on the longer ranges compared to competition. The entry price for the Tesla Model 3 in the US is around $36K which is in line with an average new car purchase price. The design for the Tesla is also of a superior nature both internally and externally.
In recent years, Tesla has been plagued by production/technical difficulties, which left prospective buyers waiting for months on end to receive their purchased car. Indeed, this was a selling point used by incumbent competitors that their experience in manufacturing vehicles will provide a quicker path to the production of EV cars for would-be clients (lower waiting time).
There has been also complaints for clients to obtain parts and carry out services for their cars. Out of the three models that it sells, two of them are sedans, within a market which has been favouring sport utility vehicle. The only offer by Tesla is the Model X, which carries out a heavy price tag.
Tesla company has been strongly backed up by entrepreneur Elon Musk which is described as charismatic by some and controversial by others. Undeniably, he is the visionary type as he managed to rise to prominence in the EV market with no prior experience in the field.
Tesla company has attracted lots of attention and as it symbolises the latest trends, technological advancement and a company which built itself from the ground up to compete against legacy competitors. The competitive landscape centres mostly on the higher end of mainstream consumer budgets, being, Audi E-tron and the Jaguar I-Pace.
BMW is expected to launch its i4, which is a sports version of the i3. BMW’s Mini Cooper is to launch the electric version (SE) for 2020. Opportunities lie ahead in the pickup truck segment in the US market, which auto manufacturers have barely touched. Detroit dominate the pickup truck segment with major investments envisaged by Ford, General Motors and Fiat Chrysler.
Disclaimer: This article was issued by Jesmar Halliday, CFA, investment manager at Calamatta Cuschieri. For more information visit www.cc.com.mt. The information, view and opinions provided in this article are being provided solely for educational and informational purposes and should not be construed as investment advice, advice concerning particular investments or investment decisions, or tax or legal advice.