September 30, 2023

Breakout Watch: Tesla evolves from EV pioneer to charging settler

Now that electric vehicles have gone mainstream, Tesla (TSLA) continues to evolve from an EV pioneer making cool cars to a settler expanding infrastructure to advance the industry. A new partnership that makes it possible Ford engine (F) to plug into Tesla’s network of superchargers, Tesla stock is sending to a new point of purchase.


The agreement between Tesla and Ford just shows how the competitive landscape for the best electric cars has moved beyond that of any other li car (LI), Bright (LCID), Rivian Automotive (RIVN), as well General engines (GM), Toyota engine (TM) and the other major automakers.

Building out the infrastructure to charge all these EVs brings new competitors, such as Charging station (CHPT), which reports earnings after Thursday’s close.

Expansion with super charge

As the Wall Street Journal reported, Tesla will give Ford EV drivers access to Tesla’s network of more than 12,000 Superchargers. The move spurs debate on setting a standard for electric vehicle charging.

In March, Consumer Reports noted that to enable non-Tesla EVs to use the Superchargers, Tesla has developed an adapter known as the “Magic Dock.” The publication added that β€œto qualify for a portion of the $7.5 billion earmarked for EV charging network expansion in the Bipartisan Infrastructure Law, [Tesla] says it will open 7,500 chargers from its Supercharger and Destination Charger network to non-Tesla vehicles by the end of 2024.

Under the agreement with Ford, owners of the Ford Mustang Mach-E, F-150 Lightning and the E-Transit vehicle will have access to the Superchargers starting early next year.

Tesla vs. Those other EV players

The table below shows how Tesla compares to a select group of other players in the EV space. (Car manufacturers such as Volkswagen (VWAGY) and Mercedes-Benz[ticker symb=MBGAF]who do not have a composite rating are excluded.)

Chinese EV maker Li Auto earns pole position with a 98 Composite Rating. Ford and Tesla stock come next, with 81 and 75 ratings respectively.

Tesla CEO Elon Musk visited China this week and reportedly told the country’s foreign minister that Tesla is willing to expand its business in China. The visit – Musk’s first since early 2020 – comes as EV competition has exploded in China, but Tesla has not provided any updates on plans to increase production at its Shanghai factory.

Meanwhile, Electrek has reported that Tesla appears to be liquidating the Model 3 ahead of a refresh launch. This is because Tesla is quietly increasing US EV discounts.

Company Symbol Comp Rtg EPS % Chg Last Qtr EPS Estimated Cur Qtr % EPS Hist. Year % EPS Estimated Next Year % EPS Rtg RS Rtg SMR Rtg
li car LI 98 186 282 367 131 84 90 C
Ford engine F 79 66 -32 -5 -2 79 43 B
Tesla TSLA 78 -21 2 -18 44 93 43 B
General engines GM 68 6 46 -11 -7 76 28 B
Toyota engine TM 53 -4 -3 17 9 48 43 C
Fisker FSR 27 7 24 56 64 26 20 D
Rivian Automotive RIVN 22 13 13 16 37 25 11 D
Bright LCID 21 -760 -30 -36 19 15 14 D
Nio NIO 12 -165 -258 3 71 1 10 D

Tesla’s Exciting Market Cap

Like the choppy volatility in Tesla stock, the company’s earnings performance has been sporadic. While the EV pioneer has averaged 146% annual EPS growth over the past three years, its quarterly growth has been bumpy.

First-quarter earnings fell 21% to 85 cents per share year-over-year. Wall Street forecasts an 18% slowdown for the year, but recovers to a 44% increase to $4.82 per share in 2024.

Sales growth was more stable, but also slowed in recent quarters. In the first quarter, revenue increased 24% year over year to $23.3 billion.

In IBD Stock Checkup, Tesla earns a B SMR Rating, which tracks sales growth, profit margins and return on equity. The company also has a low debt-to-equity ratio of 4%.

The market cap for Tesla stock is $658 billion, dwarfing Ford ($48 billion) and GM ($46 billion). At $229 billion, Toyota has about a third of Tesla’s market cap. Li tops the other EV companies on this list at just under $29 billion.

Tesla Stock charges after hitting a sharp speed bump

After reaching an all-time high in November 2021, Tesla stock fell sharply until it hit the brakes in January this year. The EV giant charged and flashed in good volume for six straight weeks before running into resistance.

After retreating below the line of the 10-week moving average in March, Tesla fell below that benchmark before retaking it as it formed its current base.

As the relative strength line brightens again, Tesla stock is now racing to a buy point of 207.89. In a sign of recovering technical strength, the 21-day exponential moving average has climbed back above the longer-term 50-day line. Above-average volume over the past few days points to demand for Tesla stock.

The EV giant slipped early Thursday and then found traction. Tesla closes just under 2% higher in above-average volume, ending the day at 207.52.

As Tesla continues to drive the EV and charging revolution, look for the stocks that can break the buy point in volume by at least 40% above average.

Follow Matthew Galgani on Twitter @IBD_MGalgani.


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