Tesla Motors Inc (NASDAQ:TSLA)’s competition is with the whole auto Industry rather than any particular automaker, according to Morningstar analyst David Whiston. Analysts note that though they are cautious over investing in Tesla, the company’s competitive position is far better than other startups in the auto manufacturing industry.
Tesla competing not only with EVs
In a note to the investors on Monday, Whiston says that Tesla Motors’s mileage gives it a competitive advantage over any other EV in the market, and compared it to Nissan Leaf’s 84 miles and Ford Focus’ 76 miles; Tesla Model S has a range of 265 miles (for the 85 kWh battery). However, analysts note that its competition is not just with EV’s, but with the entire auto industry.
The following is our rough coverage of the 2021 Sohn Investment Conference, which is being held virtually and features Brad Gerstner, Bill Gurley, Octahedron's Ram Parameswaran, Glenernie's Andrew Nunneley, and Lux's Josh Wolfe. Q1 2021 hedge fund letters, conferences and more Keep checking back as we will be updating this post as the conference goes Read More
Whiston also talked about the Morgan Stanley analyst Adam Jonas’ report which caused Tesla shares to drop. Whiston said that Jonas has warned the investors of sobering risks ahead of the car maker and one of the risks is that the whole industry will just not sit and watch Tesla capturing the ejtire EV market. However, they are likely to dominate the industry for at least a few years, notes Whiston.
Business model still needs acceptance
The Palo-Alto EV manufacturer has a clear head start after much of the competition left the arena or abandoned electric vehicle projects, especially the major automakers. This has left people wondering where Tesla stands now and where it is heading. Musk knows this well, and has even expressed doubts about the high valuation of his company. If Tesla succeeds in what it is trying to do, then the industry will witness not just a proof-of-concept for the electric car, but also for Tesla’s business model.
However, Whiston feels that to justify the business model, a lot of improvement remains be done. The analyst notes that we will need to see the success of the mod-price-range Model 3 to see if consumers are willing to buy an electric vehicle with limited range and longer charging times. Furthermore, the EV manufacturer has problems in several states about its sales model in which the cars are sold in the company’s own stores rather than franchised.
Rivals in wait and watch mode
For the short-term, Tesla has no constraints on its battery supply, and to tackle the problem in the long-run, the company is constructing a battery Gigafactory in Nevada.
Major automobile companies have adopted a wait and watch approach to identify the challenges Tesla is facing. It is highly like, that there will be a lot more competition in the industry after Tesla establishes that the market is worth competing for.