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Review of Tesla - increasing competition in EV market
08 Mar 2021 (360 views)

I now hold 300 Tesla shares. The share price during the past five days is shown in the chart below. I bought 100 share at a price of $711 USD before it dropped sharply. I bought the other 200 shares at an average of $580. 

My average cost is now $623 and the current price is $598. I now see a loss of 5% on this stock for an investment of $187,000 USD ($250,000 SGD).

A catalyst for the drop in Tesla price, apart from the market drop due to higher interest rate, is the increased competition from the traditional manufacturers who are now entering the electric vehicle market. There was a report that the electric vehicles from Ford Motors is selling well.

I believe that the competition will not have a large impact on Tesla's revenue for the forseeable future. My reaons are:

a) The EV market is growing rapidly
b) It will take a few years for the traditional manufactuers to scale up their production.

Furthermore, Tesla has a strong lead in the EV market for the reasons set out in this post. 
https://fisca.sg/ArticleDisplay.aspx?ID=885

Tesla has a lead in battery technology. While Tesla now relies on third party battery suppliers (such as Panasonic and China's CATL), they are developing their own battery technology which (I believe) will be superior to the existing suppliers. This strategy allows Tesla to be independent on third party suppliers, if the need arises.  For example, if there is a shortage of battery supply, this independence will be important to the manufacturer.

While the other EV manufactuers will do well in an expanding market, Tesla will retain a dominant lead. I am quite confident about my existing holding in Tesla shares (although the price is rather high).

Note - this is my personal opinion. I am not giving investment advice. 

Tan Kin Lian

 

 



Review of Tesla - increasing competition in EV market
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I now hold 300 Tesla shares. The share price during the past five days is shown in the chart below. I bought 100 share at a price of $711 USD before it dropped sharply. I bought the other 200 shares at an average of $580. 

My average cost is now $623 and the current price is $598. I now see a loss of 5% on this stock for an investment of $187,000 USD ($250,000 SGD).

A catalyst for the drop in Tesla price, apart from the market drop due to higher interest rate, is the increased competition from the traditional manufacturers who are now entering the electric vehicle market. There was a report that the electric vehicles from Ford Motors is selling well.

I believe that the competition will not have a large impact on Tesla's revenue for the forseeable future. My reaons are:

a) The EV market is growing rapidly
b) It will take a few years for the traditional manufactuers to scale up their production.

Furthermore, Tesla has a strong lead in the EV market for the reasons set out in this post. 
https://fisca.sg/ArticleDisplay.aspx?ID=885

Tesla has a lead in battery technology. While Tesla now relies on third party battery suppliers (such as Panasonic and China's CATL), they are developing their own battery technology which (I believe) will be superior to the existing suppliers. This strategy allows Tesla to be independent on third party suppliers, if the need arises.  For example, if there is a shortage of battery supply, this independence will be important to the manufacturer.

While the other EV manufactuers will do well in an expanding market, Tesla will retain a dominant lead. I am quite confident about my existing holding in Tesla shares (although the price is rather high).

Note - this is my personal opinion. I am not giving investment advice. 

Tan Kin Lian