With the adoption of electric vehicles underway, and with more and more veteran automakers dipping their toes in electric cars, EVs like the Tesla Model 3 are bound to see some competition. This would be notable in coming years, with vehicles like Volvo’s Polestar 2 expected to enter the market as early as 2020. Despite this influx of EVs, Tesla (NASDAQ:TSLA) bull and Loup Ventures Managing Partner Gene Munster argues that the Model 3 will likely remain unchallenged.
Currently, there are 17 EVs available in the US market. This is a notable increase from 2018, when there were only 11 that were available for purchase. By next year, there will likely be 24 all-electric cars that buyers could choose from. Munster argues that the majority of these vehicles could be divided into two categories: those that are priced above $70,000 and those that have a rated range below 130 miles. All of these, including the highly-anticipated Rivian R1S (which starts at the ~$70,000 range) or the Mini EV (which has a range of 135 miles), are not mainstream vehicles due to their cost or limited range.
For an EV to be truly mainstream, Munster noted that the vehicle must be priced below $40,000 and have a range above 225 miles per charge. Only five electric cars in the US today meet this criterion: The Tesla Model 3 Standard Range Plus, the Chevy Bolt EV and the Volt, the Hyundai Kona Electric, and the Kia e-Niro. Munster noted that among these options, the Tesla Model 3 is the “clear winner in terms of value,” and this is something that would likely continue to the coming year. Even with the upcoming competition in 2020, the Model 3 will likely be “unchallenged in its EV value proposition,” the analyst wrote.
Tesla’s year-to-date EV market share stands at a dominating 75%. According to Munster, he expects this to decline to about 20-25% over the next ten years. Provided that the US auto sales stabilize at around 18 million per year, and provided that electric car adoption becomes widespread, Tesla’s sales in the country could end up yielding around 3.6-4.5 million vehicles per year. This is notable growth, considering that Tesla is expected to deliver just over 200,000 vehicles in the US this year, as part of its estimated 360,000 global deliveries in 2019.
A key factor in this expected continued dominance is Tesla’s increasingly apparent 7-year headstart in the electric vehicle market. Munster argues that this headstart allows Tesla to enjoy a lead against its competitors in terms of batteries that are more efficient compared to other EV manufacturers, a vertically integrated Supercharger Network that’s easier to use compared to third-party charging stations, and dedicated full self-driving capabilities that are specifically tuned for the company’s vehicle lineup. These factors complete the Tesla ownership ecosystem, and all of these are present in the electric car maker’s entry-level offering, the Model 3 Standard Range Plus.
The narrative of Tesla’s upcoming competition has proven prevalent over the past years, with critics of the company dubbing electric cars such as the Jaguar I-PACE, the Audi e-tron, and the Chevy Bolt EV as potential “Tesla Killers.” As vehicles like the Model 3 continue to prove that Tesla is a moving target, and as companies like Jaguar and Audi exhibit teething problems with the I-PACE and e-tron, the gap between Tesla and its rival automakers continues to become more pronounced.
Disclosure: I have no ownership in shares of TSLA and have no plans to initiate any positions within 72 hours.
Tesla has scheduled its Earnings Call for Q4 and Full Year 2025 for next Wednesday, January 28, at 5:30 p.m. EST, and investors are already preparing to get some answers from executives regarding a wide variety of topics.
The company accepts several questions from retail investors through the platform Say, which then allows shareholders to vote on the best questions.
Tesla does not answer anything regarding future product releases, but they are willing to shed light on current timelines, progress of certain projects, and other plans.
There are five questions that range over a variety of topics, including SpaceX, Full Self-Driving, Robotaxi, and Optimus, which are currently in the lead to be asked and potentially answered by Elon Musk and other Tesla executives:
- You once said: Loyalty deserves loyalty. Will long-term Tesla shareholders still be prioritized if SpaceX does an IPO?
- Our Take – With a lot of speculation regarding an incoming SpaceX IPO, Tesla investors, especially long-term ones, should be able to benefit from an early opportunity to purchase shares. This has been discussed endlessly over the past year, and we must be getting close to it.
- When is FSD going to be 100% unsupervised?
- Our Take – Musk said today that this is essentially a solved problem, and it could be available in the U.S. by the end of this year.
- What is the current bottleneck to increase Robotaxi deployment & personal use unsupervised FSD? The safety/performance of the most recent models or people to monitor robots, robotaxis, in-car, or remotely? Or something else?
- Our Take – The bottleneck seems to be based on data, which Musk said Tesla needs 10 billion miles of data to achieve unsupervised FSD. Once that happens, regulatory issues will be what hold things up from moving forward.
- Regarding Optimus, could you share the current number of units deployed in Tesla factories and actively performing production tasks? What specific roles or operations are they handling, and how has their integration impacted factory efficiency or output?
- Our Take – Optimus is going to have a larger role in factories moving forward, and later this year, they will have larger responsibilities.
- Can you please tie purchased FSD to our owner accounts vs. locked to the car? This will help us enjoy it in any Tesla we drive/buy and reward us for hanging in so long, some of us since 2017.
- Our Take – This is a good one and should get us some additional information on the FSD transfer plans and Subscription-only model that Tesla will adopt soon.
Tesla will have its Earnings Call on Wednesday, January 28.
Elon Musk
Tesla locks in Elon Musk’s top problem solver as it enters its most ambitious era
The generous equity award was disclosed by the electric vehicle maker in a recent regulatory filing.
Tesla has granted Senior Vice President of Automotive Tom Zhu more than 520,000 stock options, tying a significant portion of his compensation to the company’s long-term performance.
The generous equity award was disclosed by the electric vehicle maker in a recent regulatory filing.
Tesla secures top talent
According to a Form 4 filing with the U.S. Securities and Exchange Commission, Tom Zhu received 520,021 stock options with an exercise price of $435.80 per share. Since the award will not fully vest until March 5, 2031, Zhu must remain at Tesla for more than five years to realize the award’s full benefit.
Considering that Tesla shares are currently trading at around the $445 to $450 per share level, Zhu will really only see gains in his equity award if Tesla’s stock price sees a notable rise over the years, as noted in a Sina Finance report.
Still, even at today’s prices, Zhu’s stock award is already worth over $230 million. If Tesla reaches the market cap targets set forth in Elon Musk’s 2025 CEO Performance Award, Zhu would become a billionaire from this equity award alone.
Tesla’s problem solver
Zhu joined Tesla in April 2014 and initially led the company’s Supercharger rollout in China. Later that year, he assumed the leadership of Tesla’s China business, where he played a central role in Tesla’s localization efforts, including expanding retail and service networks, and later, overseeing the development of Gigafactory Shanghai.
Zhu’s efforts helped transform China into one of Tesla’s most important markets and production hubs. In 2023, Tesla promoted Zhu to Senior Vice President of Automotive, placing him among the company’s core global executives and expanding his influence beyond China. He has since garnered a reputation as the company’s problem solver, being tapped by Elon Musk to help ramp Giga Texas’s vehicle production.
With this in mind, Tesla’s recent filing seems to suggest that the company is locking in its top talent as it enters its newest, most ambitious era to date. As could be seen in the targets of Elon Musk’s 2025 pay package, Tesla is now aiming to be the world’s largest company by market cap, and it is aiming to achieve production levels that are unheard of. Zhu’s talents would definitely be of use in this stage of the company’s growth.
Tesla analyst Andrew Percoco of Morgan Stanley teased the company’s dominance in its self-driving initiative, stating that its lead over competitors is “not even close.”
Percoco recently overtook coverage of Tesla stock from Adam Jonas, who had covered the company at Morgan Stanley for years. Percoco is handling Tesla now that Jonas is covering embodied AI stocks and no longer automotive.
His first move after grabbing coverage was to adjust the price target from $410 to $425, as well as the rating from ‘Overweight’ to ‘Equal Weight.’
Percoco’s new note regarding Tesla highlights the company’s extensive lead in self-driving and autonomy projects, something that it has plenty of competition in, but has established its prowess over the past few years.
He writes:
“It’s not even close. Tesla continues to lead in autonomous driving, even as Nvidia rolls out new technology aimed at helping other automakers build driverless systems.”
Percoco’s main point regarding Tesla’s advantage is the company’s ability to collect large amounts of training data through its massive fleet, as millions of cars are driving throughout the world and gathering millions of miles of vehicle behavior on the road.
This is the main point that Percoco makes regarding Tesla’s lead in the entire autonomy sector: data is King, and Tesla has the most of it.
One big story that has hit the news over the past week is that of NVIDIA and its own self-driving suite, called Alpamayo. NVIDIA launched this open-source AI program last week, but it differs from Tesla’s in a significant fashion, especially from a hardware perspective, as it plans to use a combination of LiDAR, Radar, and Vision (Cameras) to operate.
Percoco said that NVIDIA’s announcement does not impact Morgan Stanley’s long-term opinions on Tesla and its strength or prowess in self-driving.
NVIDIA CEO Jensen Huang commends Tesla’s Elon Musk for early belief
And, for what it’s worth, NVIDIA CEO Jensen Huang even said some remarkable things about Tesla following the launch of Alpamayo:
“I think the Tesla stack is the most advanced autonomous vehicle stack in the world. I’m fairly certain they were already using end-to-end AI. Whether their AI did reasoning or not is somewhat secondary to that first part.”
Percoco reiterated both the $425 price target and the ‘Equal Weight’ rating on Tesla shares.
Tesla makes big Full Self-Driving change to reflect future plans
Tesla Model S completes first ever FSD Cannonball Run with zero interventions
