With world markets feeling the effects of the ongoing energy crisis, one certain name in the auto market seems to be on a completely different route. Tesla stock has taken the high route along with oil prices after an initial dip. What’s the reason behind Tesla’s rise, and why are the other EV carmakers not following suit?
As 2022 started off with a bang in oil prices, the general consensus pointed towards an obvious spark in EV adoption and subsequent benefits for EV companies. The price surge is still in effect, and even US President Joe Biden joined in recently to support the idea of EV adoption in these times. With all that is happening, Tesla is placed miles ahead of its upstart competitors in the EV stocks race.
But the energy crisis is not just about oil. Russia’s invasion of Ukraine has upset supply chain affairs and the Federal Reserve is on the brink of driving up interest rates. The market is plagued with risks her and there. While EV companies might be doing better than others, they still have their fair share of problems.
Rivian Automotive Inc. probably tops the list of competitors, having reached a market cap bigger than Ford Motors a few months back. The company was panned to be “the next Tesla” until their share of problems got the better of them. A recent price hike announcement owing to component shortages sent Rivian’s stock down by 30%. The company has lost close to $100 billion in value since November.
Lucid Group Inc. is yet another name in the competition that couldn’t sustain the pressure. The company dropped 14% recently, after cutting down their 2022 production targets in the wake of “extraordinary” issues regarding logistics. The company’s stock is 59% down from their November status.
Most of the competition is relatively new, and inexperienced in the manufacturing aspect of the game. They do not have enough resources to capitalize on the EV adoption window as of now.
Rivian is struggling with production amidst parts shortage and energy crisis (Source)
The Tesla Advantage
It’s not like Tesla hasn’t been prone to the energy crisis and other issues. The company shares have dipped 20% this year, but its market cap stands tall at a hefty $866 billion. That is the advantage of being one of the first players in the game.
A better experience factor and more resources in the bag have helped CEO Elon Musk to navigate the energy crisis and other challenges in a much better way than his counterparts. Tesla’s domination was made apparent when Rivian and Lucid – two of the most notable publicly traded EV startups – experienced steep selloffs in their stocks owing to disruptions caused by the energy crisis.
Reports have also surfaced about Panasonic Corporation planning a US-based factory to produce li-ion batteries for Tesla. It appears as if Tesla and Musk have things under control for now, at least under more control than their competition.
Panasonic could start mass producing li-ion batteries for Tesla by 2023 (Source)
The Investors’ Choice
It is common sense that investors would be cautious as ever in making moves, provided how the current situation is panning out. Tesla is the only EV carmaker that holds a viable enough business to attract their interests in these times. Its competitors are more or less startups than full-fledged companies.
Rivian and Lucid jointly delivered around 1,000 vehicles in 2021. Tesla alone sold nearly 1 million. The numbers are enough to prove the point. For any investor betting on electric vehicles, it’s either Tesla or no one else.
Even though Tesla remains a tricky choice for investors due to valuation and volatility, it is still the safest choice amongst all other names in the EV market. If you want to bet on electric vehicles, Tesla is probably the only shot you have right now.
We can hope that 2022 proves to be yet another feather in the carmaker’s cap. In the meanwhile, all you Tesla owners out there can do your vehicle some good by shopping our premium aftermarket accessories or carbon fiber mods. Don’t stress about stocks and keep on pimping!