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Stock Market Analysis

Are Tesla’s Competitors Beginning To Catch Up?

Competition is heating up for Tesla, and these three companies are among its biggest threats in the rapidly growing space.

Tesla (NASDAQ: TSLA) has certainly come a long way since selling its first Roadster in 2008. Last year, the company delivered just shy of its 500,000 vehicle goal. Today, most car companies are pivoting to electric and have models ready for sale and will offer more models in the coming years as consumers embrace clean energy. Although Tesla is the electric vehicle (EV) market leader, Volkswagen (OTCMKTS: VWAGY) and other challengers are catching up.

1. Volkswagen

With roughly a quarter of Tesla’s market value, Volkswagen (ETR: VOW3) is the biggest manufacturer by revenue in the world. VW Group, which also owns other popular brands like Audi, Lamborghini, Porsche, and Ducati, plans to launch roughly 70 EV models by 2030 and expects EVs to account for 70% of its total car sales in Europe and over 50% in China and the U.S. by then.

Volkswagen owns the MEB (German: Modularer E-Antriebs-Baukasten) platform which is an efficient and flexible EV stage built around the concept of expanding and scaling battery storage space. The company can license this tech to other manufacturers so they can offer vehicles at different price points, as suggested by UBS analysts. In fact, the analysts say that this tech can bring the company $25 billion by 2028 in licensing agreements; additionally, they found the platform to be fully cost-competitive with Tesla and that it achieves “best-in-class energy density, efficiency, and scalability.”

Another edge the company has over the incumbent EV leader Tesla is in its customer base. Conservative consumers are too wary to try new tech and are more likely to adopt EV usage from a traditional car company they already know and trust. This is why the company is so aggressively pursuing EV tech and is opening six new battery-making plants in Europe by 2030. This will help Volkswagen slash battery costs and pass on the savings to consumers. The company is also investing $86 billion in e-mobility and digitization in the next five years.

2. NIO

Chinese EV company NIO (NYSE: NIO) has seen vehicle sales surge by nearly 500% since 2018 and its ES8 model accelerates faster and charges quicker than Tesla’s Model X. The company also has a unique business model in its Battery as a Service (BaaS) concept: Consumers own the car but NIO charges a subscription for its batteries. This helps lower up-front costs for customers and increase profits for the company as it provides a steady income stream and ultimately costs more for the subscription during the vehicle’s lifetime than it would with one lump payment

NIO had a stellar fourth quarter in 2020. Vehicle sales were up 130%, vehicle margins rose by nearly 400%, revenues climbed 133%, gross profit surged by 550%, and gross margins climbed an impressive 2610bp. Analysts anticipate that NIO will control 8% of the Chinese EV market and 4% of the global market, earning $60 billion in revenue and $7.50 EPS by 2030.

3. Lucid Motors

Lucid Motors, soon to be publicly traded via a SPAC merger with Churchill Capital Corp IV (NYSE: CCIV), is run by CEO Peter Rawlinson, a former chief engineer on the Tesla Model S. The company specializes in upscale luxury vehicles, like its Air model, which has a slightly longer range than the Tesla Model S and also offers quicker acceleration and shorter charge times. The company’s Lucid Air Dream edition sold out its 500 models at roughly $170,000 apiece and is expected to start delivery later in the year. It also boasted of over 7,500 total vehicle reservations which could translate to $650 million in sales for the company. The company has certainly made Elon Musk take notice as he lowered his Model S price to be slightly below the Lucid Air.

Lucid Motors has a second-mover advantage with Tesla engineers and this has proven to be a powerful edge as the company’s engineers were able to design a highly efficient powertrain that scores an impressive 218 watt-hours per mile in overall efficiency (OE), beating Tesla’s score of 250.

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MyWallSt operates a full disclosure policy. MyWallSt staff currently holds long positions in companies mentioned above. Read our full disclosure policy here

David Pinkhasov
David Pinkhasov
David is a contributing writer to MyWallSt. David fell in love with the stock market in 2000 after making $30,000 overnight on Techniclone. His favorite stocks today are Netflix, Google, Amazon, and Apple as they are the market leaders in their sectors and are safe long-term investments.