For years, we've heard that Tesla will fail when competition arrives. Will its value shift as OEMs bring compelling EVs to market?
Analysts are all over the map when it comes to Tesla, and they have been for years. The stock has proven volatile, and it seems no one has really been able to put a finger on its movement. CNBC's coverage is a perfect example since it seems to publish some reports of Tesla being way head and poised to succeed massively, right alongside other reports suggesting the company is on the brink of utter failure.
A recent episode of CNBC’s Street Signs (CNBC International TV) aired yesterday prior to Tesla's Q2 2020 earnings call. According to Anna-Marie Baisden, head of automotive research at Fitch Solutions, "Tesla's valuation might start to shift when rivals develop their own electric cars."
Fitch isn't alone with this opinion. Analysts have been talking about upcoming competition (sometimes coined 'Tesla Killers') for years. Some rivals have come and gone, others have seen limited success, and still others are on the way soon. However, as more and more competing models are announced and actually come to market, Tesla's valuation seems to soar even higher.
Perhaps this is because it becomes even more clear that the competition isn't compelling enough, is only being sold in limited areas and in low volume, and Tesla continues to ramp up and improve in the meantime?
We certainly agree that if there are ever truly compelling rivals that sell in large numbers and reduce the demand for Tesla's vehicles, its value will likely be impacted. The question is, when will that potential shift happen? As we look at the most notable rivals, whether current or upcoming; Polestar 2, Ford Mustang Mach-E, Rivian, Volkswagen, etc., there are plenty of questions related to pricing, production potential, availability, and timelines.
Check out the video for Fitch's analysis. Then, let us know what you think about Tesla's wild valuation. Will it eventually settle in? What will be the motivating factor? Are Tesla killers ever coming, and if so, will they make a difference?