HomeMost PopularTesla's Troubles: Mercedes-Benz Delivers A Grim Wake-Up Call

Tesla’s Troubles: Mercedes-Benz Delivers A Grim Wake-Up Call

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Tesla Reports Quarterly Earnings

Unpacking Elon Musk’s admission

“We dug our own grave with Cybertruck. Nobody — generally, everybody digs a grave better than themselves.”

Elon Musk’s recent disclosure on the overwhelming challenges of the Cybertruck launch has sparked concerns over Tesla’s future. His admission paints a grim picture of the company’s path to volume production and profitability with the Cybertruck, calling into question the current valuation of the company.

The real question: is Tesla a tech company or an automaker?

Tesla, Inc. (NASDAQ:TSLA) is at a crossroads – is it a tech company or an automaker? The answer to this question shapes the valuation and future prospects of Tesla. Financials from the last three years indicate that automotive sales far outweigh energy generation and storage revenues, placing Tesla firmly within the auto manufacturing industry, which typically trades at low multiples.

This muses that despite its disruptive reputation, Tesla is a part of an industry with established market valuation criteria. This has raised doubts about whether Tesla’s stock price accurately reflects its true value or if it is overvalued.

Given the underlying dynamics, it becomes essential to scrutinize Tesla’s business operations and its stock valuation to gauge its true potential.

The harsh reality of competition

Recently, Mercedes-Benz Group AG (OTCPK:MBGAF) conveyed a chilling reality check for Tesla, highlighting the cutthroat nature of the EV market. The company’s management emphasized the fiercely competitive environment, citing aggressive price discounts by traditional players, posing a significant threat to Tesla. With a surging array of BEV models flooding the market, the future looks increasingly challenging for Tesla, with the forecasted erosion of its market share.

In a startling blow to Tesla’s autonomy dreams, Mercedes proudly boasted of achieving higher FSD certifications than Tesla, underscoring the escalating competition in the autonomous driving arena.

Even Volkswagen (OTCPK:VWAGY), the BEV market leader in Europe, shared disconcerting insights about the tepid reception of BEVs in the European market, signaling potential headwinds for Tesla’s ambitious growth plans.

Furthermore, Tesla’s aggressive pursuit of volume growth through price reductions has been a double-edged sword, with shrinking margins offsetting the gains from better scale.

The industry’s competitive pricing environment and Tesla’s strategic price cuts have aggravated its margin pressures, raising concerns about the company’s future profitability and sustainability.

These revelations about the headwinds faced by Tesla from its competitors throw into question the optimism surrounding the company and its stock, warranting a critical re-evaluation of its market positioning and growth prospects.

Electric Car Manufacturers Face Tough Market Amid Rising Prices and Stiff Competition

Tesla’s Skyrocketing Valuation May Be Unsustainable, Warns Investment Analyst

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