Skip Navigation Links
The electric vehicle market and Tesla
12 May 2021 (416 views)

I have a large investment in Tesla shares comprising of 400 shares at a cost of $260,000 USD.

My average cost per share is $650. The current share price is $617. A month earlier, the price was at $780. It has dropped by 21% during the past month.

The drop in price is attributed to the following reasons:

a) Shortage of chips resulting in lower production of vehicles
b) Greater competition in the EV market
c) Some negative publicity involving Tesla 

I still remain confident about Tesla over the next few years for the following reasons:

a) The shortage of chips and competition affects all EV manufacturers. 

b) Tesla has a lower cost of production and can be profitable in a tough market. 

c) Tesla has a lead in the battery technology and has lined up the battery production that is needed for their future growth. 

I expect several of the EV manufacturers to become bankrupt, as they are operating at large losses and at low margins.

Tesla will face competition from the large manufacturers, such as Toyota, Ford, Volkswagon and General Motors, that will move into the EV market. I expect that they will also find it challenging to be profitable in this competitive market. Some may not survive.

I expect Tesla to be able to ride out the competition better than the EV startups and the large manufacturers that are now entering the EV market. 

The problem facing Tesla is that the stock price is now insanely high (with a price earning ratio of 300 times). However, with the expected increase in earnings that may occur over the next two years, the PE ratio will come down to an acceptable level.

I will hold my investment in Tesla.

Note - I am giving my personal view of this stock. I am not giving investment advice to buy or sell this stock at any specific price.

Tan Kin Lian


 


The electric vehicle market and Tesla
[Back] [Print]


I have a large investment in Tesla shares comprising of 400 shares at a cost of $260,000 USD.

My average cost per share is $650. The current share price is $617. A month earlier, the price was at $780. It has dropped by 21% during the past month.

The drop in price is attributed to the following reasons:

a) Shortage of chips resulting in lower production of vehicles
b) Greater competition in the EV market
c) Some negative publicity involving Tesla 

I still remain confident about Tesla over the next few years for the following reasons:

a) The shortage of chips and competition affects all EV manufacturers. 

b) Tesla has a lower cost of production and can be profitable in a tough market. 

c) Tesla has a lead in the battery technology and has lined up the battery production that is needed for their future growth. 

I expect several of the EV manufacturers to become bankrupt, as they are operating at large losses and at low margins.

Tesla will face competition from the large manufacturers, such as Toyota, Ford, Volkswagon and General Motors, that will move into the EV market. I expect that they will also find it challenging to be profitable in this competitive market. Some may not survive.

I expect Tesla to be able to ride out the competition better than the EV startups and the large manufacturers that are now entering the EV market. 

The problem facing Tesla is that the stock price is now insanely high (with a price earning ratio of 300 times). However, with the expected increase in earnings that may occur over the next two years, the PE ratio will come down to an acceptable level.

I will hold my investment in Tesla.

Note - I am giving my personal view of this stock. I am not giving investment advice to buy or sell this stock at any specific price.

Tan Kin Lian