Tesla has had a tough 2024, with its shares down 34% year to date. But the electric vehicle industry as a whole is going through tough times, and relatively speaking, Elon Musk’s automaker is doing well, says one industry observer.
CFRA Automotive Analyst Garrett Nelson talking to Fox Business this week noted that Tesla rival Fisker recently hired restructuring consultants amid talk of possible bankruptcy. And major automakers, he added, are increasingly focusing on hybrids, which give owners better fuel efficiency without range concerns as growth in electric vehicle sales slows.
“This really opens up the opportunity for Tesla to increase its market share even further in the coming years,” Nelson said.
While Musk’s automaker faces challenges in China, where electric vehicle competition is intense, Nelson said, “We see Tesla as having a better home in a bad quarter in the Western market.”
In another sign of this bad block, Tesla rival Rivian – amid doubts about its long-term prospects – recently announced it would delay construction of a plant in Georgia and save money by instead producing its future new models at its existing plant in Illinois.
“There are a lot of problems going on in the electric vehicle industry,” Nelson said.
Of course, Tesla has had its share of existential problems as an electric vehicle startup not too long ago.
But today’s Tesla, Nelson said, is “very different from the company of three or four years ago. The company has an investment grade balance sheet. They are sitting on more than $29 billion in cash and virtually no debt.”
One thing that has changed since then is that Musk bought Twitter, now X, and continues to voice or amplify sometimes controversial positions on the platform.
On Thursday, Ross Gerber, CEO of Gerber Kawasaki Wealth & Investment Management, expressed disappointment about Musk’s leadership and public behavior during a conversation with Yahoo Finance.
“The original story, which I think most investors bought into with Tesla, didn’t really include Elon and Twitter… For a long time, we were all hoping that this really wouldn’t impact Tesla and the demand for its products,” Gerber said. “We all know this has happened now. Demand for Tesla products is clearly lower. “They had to discount and do a lot of things that hurt margins and profits and ultimately Tesla’s profits.”
As for Nelson, when asked whether Musk’s “erratic and compulsive behavior” played a role in the stock’s decline, he replied: “Of course it does. The share price reflects all available information about the company, including Musk’s behavior.”
But he said Tesla’s pullback was overdue: “If you look at it, Tesla’s stock more than doubled last year, so a 30% or so pullback isn’t all that surprising.”
He said his firm bought, bought on the dip, and he expects the stock to rise 68% above today’s level.