We recently compiled a list of the 8 Best EV Stocks To Buy Right Now. In this article, we are going to take a look at where Tesla, Inc. (NASDAQ:TSLA) stands against the other EV stocks.
After a swift rise in the EV industry over the years, we saw a slowdown in its progress, especially in Europe and the USA. Nevertheless, it is just a matter of time before the technology takes over the traditional internal combustion engines (ICE).
While the growth has been slowing in the western part of the world, China has been working tirelessly to become the global leader in the EV industry. In a podcast episode of Everything Electric Show on October 20, Ford CEO Jim Farley discussed the ongoing transformation in the automotive industry.
He noted that while EV adoption continues to grow worldwide, significant changes have occurred regarding market dynamics. He emphasized China’s dominance in EV production, with 70% of global EVs manufactured there. A rapidly expanding sub-segment in China is electric vehicles with extended range (e-rev), which use a small combustion engine to power the batteries for longer trips.
This shift is reshaping global supply chains, brand preferences, and jobs, with geopolitical factors further influencing the industry’s future. Farley noted that these changes have become clearer over the past year.
We also discussed the country’s dominance in our article about small-cap EV stocks to invest in. Here is an excerpt from the article:
“While the growth in the US and Europe is slowing down, China is picking up a significant pace and dominating the EV landscape. According to a World Economic Forum report, Chinese EVs are much cheaper than their Western counterparts, with an average price of $34,400, compared to $55,242 in the U.S. The price gap is driven by lower labor costs, favorable government subsidies, and more affordable battery sourcing.
Chinese automakers now produce more than half of the world’s EVs and are using their cost advantages to potentially dominate the global market. As Chinese brands gain scale and expertise, their competitive pricing could allow them to challenge Western automakers.”
Read Also: 7 Best Delivery Stocks To Invest In Now and 10 High Growth Non-Tech Stocks That Are Profitable in 2024.
US Racing Against China’s Dominance
The United States government acknowledges the potential of EVs in the future of mobility and is trying its best to push for its development. On July 11, the Department of Energy (DOE) announced $1.7 billion in grants aimed at converting 11 auto plants in eight states to produce electric vehicles and components.
Reuters reported on October 22 that U.S. Energy Secretary Jennifer Granholm announced that the DOE is working quickly to finalize $1.7 billion in grants. The funds include $500 million for GM’s Michigan plant and $334.8 million for Stellantis’ Belvidere plant, with additional funds for the latter’s Indiana facility.
According to another Reuters report from September 23, Monroe Capital LLC announced plans to launch the Drive Forward Fund LP, aiming to raise up to $1 billion to provide loans to smaller auto suppliers transitioning from internal combustion engine vehicles to EVs.
The White House supports this initiative, emphasizing that it will offer affordable capital to help small and medium-sized auto manufacturers refinance, grow, and diversify and will benefit over 250,000 workers.
Moreover, new U.S. tariffs on Chinese EVs and stricter emissions regulations are pushing automakers to adapt their supply chains. Monroe CEO Ted Koenig highlighted the fund’s importance in cultivating growth and innovation among suppliers struggling to secure financing for EV production.
Our Methodology
For this article, we identified over 30 EV manufacturers using the Finviz stocks screener and narrowed our list to 8 stocks most widely held by institutional investors. The stocks are listed in ascending order of their hedge funds which was taken from Insider Monkey’s Q2 database of 912 elite hedge funds.
Why are we interested in the stocks that hedge funds pile into? The reason is simple: our research has shown that we can outperform the market by imitating the top stock picks of the best hedge funds. Our quarterly newsletter’s strategy selects 14 small-cap and large-cap stocks every quarter and has returned 275% since May 2014, beating its benchmark by 150 percentage points (see more details here).
25 Most In Demand Cars Heading into 2024
Tesla, Inc. (NASDAQ:TSLA)
Number of Hedge Funds Holders: 85
Tesla, Inc. (NASDAQ:TSLA) is an EV company known for its innovations in the automotive and clean energy industries. It designs, manufactures, and sells BEVs and offers energy storage and solar products. Tesla is a key player in the EV market and has influenced the adoption of the North American Charging Standard (NACS), which has been in use since 2012 and gained broader industry acceptance in 2022. It tops our list of best EV stocks to buy.
In Q3, the company’s global vehicle sales rose by 6.4% in the third quarter, marking its first increase this year and suggesting a possible recovery in demand for electric cars as interest rates decline. The company delivered 462,890 vehicles in the third quarter and produced nearly 470,000. Tesla’s (NASDAQ:TSLA) Model 3 and Y were the best-selling products and it delivered nearly 440,000 of those.
At the “We, Robot” event on October 10, the company’s CEO Elon Musk introduced two new vehicles, the Cybercab and Robovan. The Cybercab, designed without a steering wheel or pedals, is expected to cost under $30,000 and begin production in 2026. The Robovan will be capable of transporting up to 20 passengers or cargo. Musk compared the event to the significance of the 2017 Model 3 launch.
In an October 15 newsletter by Cathie Wood’s Ark Disrupt, said that while Tesla’s (NASDAQ:TSLA) stock price declined after the event, the firm still views it in a good light. The firm said that the company plans to introduce unsupervised Full Self-Driving (FSD) in California and Texas next year, with a full robotaxi network expected by 2025 or 2026. The company also intends to sell the Cybercab to consumers and may encourage third-party robotaxi fleet businesses, although most fleets will likely be owned by external operators.
Elon Musk mentioned robotaxi ride costs could range from $0.30-$0.40 per mile, which aligns with research predicting costs around $0.25 per mile. This would be far cheaper than current ride-hailing services and will position robotaxis as a highly competitive option.
The firm said that Tesla’s (NASDAQ:TSLA) stock dropped after the event, likely due to delayed FSD timelines now expected between 2025 and 2026. However, the company’s data advantage may enable it to scale faster than competitors.
Baron Partners Fund stated the following regarding Tesla, Inc. (NASDAQ:TSLA) in its Q2 2024 investor letter:
“Tesla, Inc. (NASDAQ:TSLA) manufactures electric vehicles, related software and components, and solar and energy storage products. The stock contributed as Tesla continued to drive vehicle manufacturing costs lower, accelerate the launch of new models, and invest heavily in its lucrative AI initiatives. Shareholders reaffirmed the CEO’s compensation plan, alleviating personnel and legal uncertainties. Despite material operational complexities resulting in significant shutdowns of key manufacturing facilities and lower sales volume, Tesla presented better-than-expected margins in the quarter. It expects to launch a lower cost model as soon as late 2024, which should result in accelerated revenue growth, reduced manufacturing costs, and increased factory utilization. The company continued to advance its autonomous driving capabilities, expanding its already significant data centers and developing its humanoid robot Optimus. These investments increased confidence in the attractive growth opportunities that remain ahead.”
Overall TSLA ranks 1st on our list of the best EV stocks to buy. While we acknowledge the potential of TSLA as an investment, our conviction lies in the belief that AI stocks hold greater promise for delivering higher returns and doing so within a shorter timeframe. If you are looking for an AI stock that is more promising than TSLA but that trades at less than 5 times its earnings, check out our report about the cheapest AI stock.
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Disclosure: None. This article is originally published at Insider Monkey.