Tesla is the most valuable automotive company in the world by market capitalization, with a value of over $557 billion and is followed by Toyota with over $314 billion and the Chinese BYD, $87 billion. But when it comes to automobiles sold in 2023, Tesla is far behind the big traditional automakers in the standings with 1.8 million units sold, while Toyota is number one and the only company that sold over 10 million cars last year.
There are now signs that Tesla’s position is under threat as traditional automakers are making strides on the EV market, crowding the more premium segments, while Chinese automakers like BYD or NIO control the lower end of the EV spectrum with their highly competitive prices, writes eToro analyst for Romania, Bogdan Maioreanu. In addition, hybrids and especially plug-in ones are gaining in popularity, offering more, albeit indirect competition for Tesla.
From the beginning of the year Tesla has been almost constantly in the media’s attention but for all sorts of controversies affecting its brand reputation. The latest news is not good either. U.S. prosecutors are examining whether Tesla committed securities or wire fraud by misleading investors and consumers about its electric vehicles’ self-driving capabilities, according to Reuters.
To add to uncertainty, the company is still in search of a clear identity (is it a tech company, an electricity company or an automaker?) despite the fact that 82% of its turnover is coming from vehicle sales. But now it is somehow changing direction with Musk mentioning his vision of Tesla as a company that’s building artificial intelligence software to turn existing cars into self-driving vehicles, dedicated robotaxis that will make money for their owners and will ”solve autonomy”. Investors reacted positively to this, for the short term at least. But the robotaxi’s success is not guaranteed, self-driving capabilities of the automobiles are not fully functional requiring human supervision and development requires more money and more time to reach the safety levels needed to satisfy regulators.
In addition, news emerged that Apple might start a partnership with a US electric vehicle firm, believed to be Rivian, sparking hopes that we might see “the Apple car” eventually. If this will prove to be true, Tesla might receive a strong competitor with EV knowledge and Apple’s deep pockets, loyal customer base and technology knowhow.
Now investors are voting for the upcoming general assembly whether to award or not to Elon Musk a record $56 billion compensation package that was voided by a Delaware judge in 2018. The timing is not the best as Tesla deliveries in Q1 are the lowest since 2022 and its stock price lost over 30% since the beginning of the year. But investors fear that if not awarded the compensation package Elon Musk might leave Tesla.
Despite all the controversies Tesla still has a very strong fan base among investors due to its past performance. On the social trading and investing platform eToro, Tesla was the most held stock by global and Romanian retail investors at the end of Q1 2024.
Meanwhile, the second most valuable automotive company in the world, Toyota, is posting good results and vowing to increase investment in battery-electric vehicles, AI and hydrogen fuel technologies and it has the resources to fund innovation. For the fiscal year that ended in March 2024 Toyota Motors posted sales of 45 trillion yen ($290 billion) 21% higher than last year. According to Toyota the increase in sales volume was based on several factors including introduction of new models, and fresh products underpinning price revisions in North America, Europe and Asia. Also the increase of semiconductors supply helped boost production and made high end models a growing proportion of sales. Toyota Motors stock price is reflecting its financial performance too. In the past 12 months the stock price increased 68%.
Both companies will face strong competition in 2024. But the diversity of models offered to clients might make the difference for market success. And here Tesla risks being squeezed out by traditional carmakers like Toyota with their wide range of models, to which they are increasingly adding EVs and hybrid lineups, while Tesla also has to worry about Chinese competitors that are pushing the EV industry into a price war on some markets.
Investors enthusiasm in Electric Vehicles companies is dimming
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