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Who's the EV Stock Leader? Warren Buffett Says There Isn't One

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Again a great article from Motley Fool for those looking at the EV Transition to invest in now or in the future. If you don't like or want EVs don't buy one.

If you have links for more info on the industry please do add them in answers.

Key Points:

Warren Buffett recently expressed uncertainty regarding electric vehicle stocks, noting that intense competition makes the sector difficult for investors to navigate.

Consumers are still early in their adoption of electric vehicles, and very early in their adoption of autonomous vehicles, but both markets are forecasted to grow quickly in the coming years.

Tesla may have a durable competitive advantage in the form of manufacturing technology and artificial intelligence expertise.


"The EV industry has already created tremendous wealth for some shareholders. For instance, Tesla (TSLA -2.55%) stock is up 4,500% over the last decade, meaning an initial investment of $25,000 in 2013 would be worth $1.1 million today. More importantly, the market is still early in its adoption of EVs, and very early in its adoption of autonomous vehicles, but experts expect both industries to grow quickly in the coming years.

According to Precedence Research, the EV market will increase at 23% annually to reach $1.7 trillion by 2032, and the autonomous vehicle market will increase at 39% annually to reach $1.8 trillion by 2030. That growth will undoubtedly create wealth for some investors, but identifying the long-term winners in either market could be challenging.

Ultimately, there is no right or wrong answer regarding EV stock ownership, but there are good and bad strategies. Investors that buy EV stocks should do so in the context of a diversified portfolio, and they should understand the risks Buffett pointed out.

Tesla could be a long-term winner in the EV sector

Tesla is one of the riskier stocks in my portfolio. Shares currently trade at 6.9 times sales and 103 times free cash flow. Those valuation metrics are outrageous compared to automakers like Ford and General Motors. Yet, I have no plans to sell my stake in Tesla, and I believe the stock will grow severalfold in value over the next decade or two.

Here's my investment thesis: Tesla is the market leader in battery electric vehicles, and I believe its capacity for innovation will keep it ahead of its peers for years to come. That doesn't mean Tesla will maintain its current market share. The company will almost certainly continue to lose market share in the coming years. But the EV market is big enough for several winners, and I believe Tesla will outpace its peers in terms of profitability.

Why? Tesla can produce battery packs (the most expensive part of an EV) at a lower cost per kilowatt-hour than any rival, and analysts at Cairn Energy Research Advisors expect that advantage to persist through the end of the decade. More broadly, CEO Elon Musk says Tesla possesses the most advanced manufacturing technology in the world. That is somewhat subjective, but Tesla did report the highest operating margin among volume carmakers last year, and management believes the company will retain that title in future years.

Additionally, Tesla is a frontrunner in the race to build a fully autonomous vehicle. Data is the cornerstone of AI, and Tesla has far more autopilot-enable cars on the road than its peers, meaning it has more training data for its full self-driving (FSD) software. Tesla cars also pack the most efficient inference computer in the world, according to Musk. Those assets should come to bear in the near future. Tesla recently made its FSD software generally available across North America, and it plans to mass produce a robotaxi in 2024. Ultimately, higher margins on FSD software and autonomous ride-hailing services could make Tesla even more profitable.

Admittedly, the portion of my investment thesis related to autonomous vehicles is very theoretical, and I know some investors disagree with my conclusion on Tesla. But I have a diversified portfolio and a long time horizon, so I am comfortable owning the stock despite the risk."



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Tesla crushes sales estimates, nears 300% sales growth in Germany


"Despite numerous macroeconomic headwinds, Tesla has reported a massive 272% increase in sales year-over-year in Germany during April.

As Europe’s largest car market and automotive center, Germany is often used as a bellwether for the broader European automotive market. Hence, as Tesla has continued to grow sales in Germany dramatically, it has seen its European sales follow suit. Now, the German government agency that tracks car registrations in the country reported on the automotive sales of April, indicating that Tesla has continued its massive sales growth and has reached a new crucial sales milestone.

According to the KBA, the German car registration agency, Tesla sold a total of 2,420 vehicles during April, which is an astronomical 272.3% growth from just one year ago. This incredible sales success is on top of one of Tesla’s most successful sales quarters in the country, demonstrated by Tesla’s 4-month sales growth. Compared to the first four months of 2022, Tesla sales have more than doubled, up 109.2%.

Perhaps more critical than Tesla’s sales growth, the company has crossed the 1% marketshare milestone, accounting for 1.2% of all car sales in Germany during April. Tesla has previously crossed this milestone, but with a 0.2% margin, this is some of the most market presence the American automaker has ever achieved in the country.

The German agency has not yet released model-specific sales numbers.

It should be noted that Tesla’s success matches a broader industry trend, which saw car sales explode during the fourth month of the year, up 12.6% compared to April ’22. Moreover, EV sales caught their stride during April, up 34.1% year-over-year, representing a record 14.7% of the overall market. A total of 29,740 EVs were sold during the month.

Looking forward to the rest of the quarter, Tesla should expect even stronger sales in the coming two months if the market continues to follow its traditional path. March is typically the strongest month of the year, and despite the dip in sales from March to April of this year, analysts expect a slight rebound into May and June, which are typically better sales performers."



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