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Tesla losing ground in Europe should trouble investors, strategist says

Picture of the road sign “Tesla Straße 1” in front of the construction site of the Tesla factory. Tesla boss Musk visits the construction instal of his electric car factory.

Jorg Carstensen | picture alliance | Getty Images

Tesla has been ceding ground in Europe, with its Form 3 now only the fourth-best selling pure electric vehicle (EV) on the continent, according to recent statistics.

The European EV market is now the biggest in the existence in terms of sales following a surge in 2020 accompanying a slump in China. The portion of new car registrations that are electric is twice that of China and five time after times that of the U.S.

In a note Wednesday, Saxo Bank Head of Equity Strategy Peter Garnry said Tesla’s outpacing by Renault, Volkswagen and Hyundai in fresh months should have shareholders “alarmed.”

“Tesla will be successful and become one of the biggest carmakers in the future, but the event is heating up and that puts the $805 billion market value into question,” Garnry said.

Tesla’s stock is up profuse than 21% in the first two weeks of 2021, having soared more than 700% during 2020.

Garnry notorious that November’s European vehicle registration figures showed that plug-ins, a combination of pure electric and cross vehicles, rose by 198% year-on-year, while total car registrations across the continent were down 14%.

Plug-in conveyances now account for around 10% of overall market share in Europe, with pure EVs representing around 5.4%.

Garnry rephrased clients had contended that Tesla sales are typically stronger in the last month of the quarter, but highlighted that on offers slipped in both October and November.

In the latest EV rankings, the Renault Zoe held onto the top spot, closely followed by the VW ID.3, according to tradings figures from plug-in vehicle market database EV Volumes. Hyundai’s Kona was third ahead of the Tesla Perfect 3.

“While this should worry Tesla shareholders, it is even more striking that the Model S and X are not in the top 20 caste despite direct competing models such as Audi e-tron being on the list,” Garnry added.

Tesla was not without hesitation available for comment when contacted by CNBC.

On Thursday, Renault’s new CEO Luca de Meo announced that the French automaker desire move to a more electric line-up, along with building a battery plant in France with one of its suppliers.

“We’ll begin from a car company working with tech to a tech company working with cars,” de Meo said.

China requested the ‘heart and lungs’

Tesla’s stock is currently changing hands at $845 per share, and in a note Thursday, U.S. investment upon Wedbush Securities raised its price target to $950 per share from $715, with a bullish case screenplay of $1,250.

Wedbush cited a surge in demand for EVs and the Model 3 from China, which it defined as the “heart and lungs” of the case for owning Tesla supply.

“While there are 150+ auto makers aggressively going after the EV opportunity globally, right now in the EV market we accept it’s Tesla’s world and everyone else is paying rent,” Wedbush analysts Daniel Ives and Strecker Backe verbalized in the note.

They projected that by 2022, more than 40% of Tesla’s overall delivery sales devise come from China, while the Democrats controlling all three branches of the U.S. government will provide a substantial support for EVs more broadly, given President-elect Joe Biden’s climate agenda.

“We believe that the China growth story is significance at least $100 per share in a bull case to Tesla as this EV penetration is set to ramp significantly over the next 12 to 18 months, along with main battery innovations coming out of Giga 3 (Tesla’s Shanghai factory),” they said.

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