Tesla has had a tough 2024, with its shares down 34% year to date. But the electric vehicle industry in general is going through a tough time and, relatively speaking, Elon Musk’s automaker is doing well, one industry observer believes.
CFRA auto analyst Garrett Nelson, speaking to Fox Business this week, noted that Tesla rival Fisker recently hired restructuring consultants amid talk of a possible bankruptcy. And major automakers, he added, are turning their attention more to hybrids — which offer owners greater fuel efficiency without the anxiety of range — as electric vehicle sales growth slows.
“This really paves the way for Tesla to further increase its market share in the coming years,” Nelson said.
While Musk’s automaker faces challenges in China, where competition from electric vehicles is intense, Nelson said, “we view Tesla as the best house on a bad block in the Western market.”
Another sign of that “bad lockdown” was Tesla rival Rivian – amid doubts about its long-term prospects – recently announcing it would delay building a factory in Georgia and save money by building its next new ones instead models in the existing plant in Illinois.
“There is a lot of pain in the electric vehicle industry,” Nelson said.
Of course, Tesla had its existential difficulties as an electric vehicle startup not too long ago.
But Tesla today, Nelson said, “is very different from the company of three or four years ago. The company has an investment grade balance sheet. They have more than $29 billion in cash, almost no debt.”
One thing that has changed since then is that Musk bought Twitter, now X, and has continued to express or amplify sometimes controversial positions on the platform.
On Thursday, Ross Gerber, CEO of Gerber Kawasaki Wealth & Investment Management, expressed frustration with Musk’s leadership and public behavior while speaking with Yahoo Finance.
“The original story that I think most investors believed with Tesla didn’t really include Elon and Twitter… For a long time, we all hoped that it wouldn’t really affect Tesla and the demand for its products,” he said Gerber. “We all know this happened now. Demand for Tesla products is obviously lower. They had to discount and do many things that hurt Tesla’s margins, returns and ultimately profits.”
As for Nelson, when asked if Musk’s “erratic and compulsive behavior” played a role in the stock’s decline, he responded: “It certainly does. The stock price reflects all available information regarding the company, including Musk’s behavior.”
But, he argued, the pullback in Tesla stock was overdue: “If you look, last year Tesla stock more than doubled, and so for the stock to have a 30% or so pullback isn’t really the case. amazing”.
His firm bought the dip, he said, with a price target of $275, compared with $164 today.