Elon Musk’s Plan Is Genius

It’s easy to talk trash about Elon Musk these days. His SpaceX rocket exploded last week, Twitter’s a freaking mess and he can’t seem to go more than a few days without putting his foot in his mouth. 

However, none of this matters to Tesla (TSLA) investors concerned with the health of the company.  Especially long-term TSLA investors concerned with the long-term strategy and health of the company. 

First, put Tesla’s reportedly lackluster earnings report out of your mind. Because, even with the post-earnings dip (which screams buying opportunity), TSLA crushes its automaking competition year to date. 

Source: Google Finance 

It’s no surprise that Tesla is #1 among all stocks in Trackstar, our proprietary sentiment indicator. And #1, by a mile, relative to other carmakers. 

Second, Tesla acts like a tech company. Always has. Always will. 

Old-timers such as Ford (F) are akin to your Grandma downloading TikTok. Trying to be cool. Looking really funny while doing it. How cute, Ford? You lost $6 billion on your electric vehicle play over the last three years. Way to go! 

Back to Tesla…

As a tech company, Tesla, like, say, Amazon (AMZN) and Uber (UBER), focuses on growth. Awesome thing is, even entrenched in a growth phase, Tesla still makes money. Amazon could not say that for a long ass time. Along with growth, there’s a focus on market share. 

Tesla’s recent price cuts are a market share grab, coming at precisely the right time. 

Consider the most recent EV market data from Cox Automotive: 

• With 42 electric vehicles to pick from, EVs made up 7.2% of all new vehicle sales in Q1. 
• In terms of market share, Chevrolet is #2 (7.6%) and Ford #3 (4.2%). 

As for Tesla, it’s not even close. 

Tesla’s market share stands at 62.4%. 

While that’s down 21% from 2020’s 79% share, it’s only down 2.8% from 2022’s 64.2% market share. So, while Tesla is losing market share, it’s not losing it as fast as it was, even as more electric vehicles hit the market and companies such as Ford come late to the game. 

The Bottom Line: Think of Tesla like a bar. Bars want other bars on the same street, within walking distance. It’s actually good for business. 

The larger EV market has Tesla to thank for the overall market share gains. It’s like Tesla is throwing them a bone by opening the doors to this new space. At the same time, the more mainstream EVs become, the more people will look at Tesla. 

Therefore, it makes perfect sense for Musk to make market share grabs – by tweaking prices here and there. Goal #1 is for Tesla to be the dominant player once EVs go completely mainstream. From there, Tesla can focus less on volume and more on increasing profitability. Really a genius move.

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