Tesla’s long-term prospects must be called into question due to the doubts and suspicions Tesla is currently not in a position for long-term success and dominance due to the competitiveness of the electric vehicle (EVs) market and the car industry.
Tesla’s share of the car market
Legendary investor Bruce Greenwald stated that there is ‘Not a chance’ Tesla will dominate the car industry in 20 years.
This is due to the car industry, with Tesla leading all others, selling slightly over 936,000 units in 2021. This company has a market share of nearly 14%. Close behind Tesla was the VW Group, with just over 11% of the market last year.
This means that even with Tesla controlling 14% of the market share and expanding its production and sale of electric vehicles in the long-term, Tesla was complete with other car companies who have their infrastructure and are developing their electric cars.
With events in Ukraine, rising oil prices the rise in cost-of-living, there is a strong probability that companies will be moving faster toward electric vehicles. This will increase Tesla’s composition and the possibility that its market share will decrease and face financial losses due to the competition.
A sign of the move away from the internal combustion engine is Norway plans to only use electric cars by 2025.
Understanding the number
Currently, there are over 1.2 billion cars on the roads, with about 60 million being electric vehicles; this means that Tesla only controls 14% of that market share in the amount of EVs.
Though the number of electric cars is expected to increase, other manufacturers and companies will be going into that space.
Diversify Stock Portfolios
KraneShares Anthony Sassine, a Director, and Senior Investment Strategist, believes EVs will completely replace internal combustion engines.
According to the Bloomberg Electric Vehicle Index Country Breakdown, China has the largest market for EVs at 34%, followed by the U.S. (28%) and Germany (11%). Asia is leading the transformation to EVs, followed by Europe and the U.S.
With the electric vehicles going to increase over the following decades, investments in the future are an intelligent strategy; however, it’s standard practice to invest in multiple companies to hedge your bets to ensure that your nest egg and hard-earned cash are not placed in one company.
With the possibility of a recession on the horizon and Tesla facing competition from home and abroad, its long-term viability must be examined due to competition.
It’s also wise to keep informed on the international situation due to the possibility of a break between the USA & China over Geopolitics and the chance of Donald Trump in 2024.