{"id":49137,"date":"2023-05-08T09:03:29","date_gmt":"2023-05-08T13:03:29","guid":{"rendered":"http:\/\/autosector.com\/?p=49137"},"modified":"2023-05-08T09:03:29","modified_gmt":"2023-05-08T13:03:29","slug":"tesla-stock-down-long-term-low-cost-production","status":"publish","type":"post","link":"http:\/\/autosector.com\/?p=49137","title":{"rendered":"Tesla’s Stock Is Down, But The Long-Term Story Appears Super Solid"},"content":{"rendered":"

This article comes to us courtesy of\u00a0EVANNEX<\/a>, which makes and sells aftermarket Tesla accessories. The opinions expressed therein are not necessarily our own at\u00a0InsideEVs<\/a>, nor have we been paid by\u00a0EVANNEX\u00a0to publish these articles. We find the company’s perspective as an aftermarket supplier of Tesla accessories interesting and are happy to share its content free of charge. Enjoy!<\/em><\/p>\n

Posted on<\/span>\u00a0EVANNEX on May 08, 2023,\u00a0by<\/span>\u00a0Peter McGuthrie<\/p>\n

Following\u00a0Tesla\u2019s first-quarter earnings report<\/a>\u00a0last month, the company\u2019s stock has fallen a bit as some air concerns about margins and net profits. Still, some Tesla<\/a> shareholders are looking at a few key details to keep their focus on long-term potential, some of which were also discussed in the earnings report.\u00a0<\/p>\n

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Above: A Tesla Model Y (Image: Casey Murphy \/\u00a0EVANNEX<\/a>).<\/em><\/p>\n

In recent weeks,\u00a0The Motley Fool<\/em><\/a>\u2019s\u00a0<\/em>Lawrence Nga has pointed to two specific talking points surrounding Tesla\u2019s stock. While revenue growth and net income were stifled by price cuts in Q1, Nga recommends focusing on the company\u2019s plans to become the electric vehicle industry\u2019s lowest-cost producer, and on its impressive balance sheets \u2014 both of which he says \u201cshould produce tremendous benefits for the future.\u201d<\/p>\n

<\/svg><\/span>1. Tesla Wants to Become the EV Producer with the Lowest Costs<\/h2>\n

When Tesla first started cutting prices this year, headlines broke about the company waging a \u201cprice war\u201d against other automakers, and for good reason. The move to become the pricing leader boosted sales volume in Q1 and may well continue to do so, ultimately expanding economies of scale and the company\u2019s overall operating leverage.<\/p>\n

In doing so, Nga argues that Tesla\u2019s expanding economies of scale should help production costs go down even further in the future, letting the automaker make prices even more affordable. The cycle of falling production costs and increasing sales volume could someday push Tesla to become one of the largest vehicle producers in time, according to Nga.<\/p>\n

As pointed out by CEO Elon Musk<\/a> during the earnings call, deploying a high volume of EVs will also provide increased revenue streams in the future through autonomy, Supercharging and connectivity. Still, the strategy does hurt in the near term, as demonstrated by Tesla\u2019s falling revenue in Q1 from Q4 2022, despite the increase in overall sales volume.<\/p>\n

Nga posits that investors should focus on long-term potential, rather than near-term struggles, adding that it will take years for Tesla\u2019s sales volume to truly show its benefits. However, the Model Y also became the best-selling non-pickup in Europe and the U.S. in Q1, showing a clear increase in sales volume.<\/p>\n

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<\/svg><\/span>2. Tesla\u2019s Cash Balance Sheet is \u2018Rock-Solid\u2019<\/h2>\n

Secondly, Nga calls Tesla\u2019s balance sheet \u201crock-solid,\u201d with the company\u2019s $22.4 billion in cash, cash equivalents and investments. It\u2019s also noteworthy that Tesla almost went bankrupt just a few short years ago, despite the accomplishment. Most of Tesla\u2019s revenue comes from its auto business, though continued growth in its Full Self-Driving beta, robotics, and energy storage businesses can also be expected in the years to come.<\/p>\n

Tesla\u2019s strong cash flow can help the company remain stable despite ongoing economic uncertainty when consumers may be less likely to make large purchases, like an EV. It also gives Tesla added flexibility in managing long-term objectives, such as the company\u2019s plans to build a high-volume next-generation EV platform at an upcoming Gigafactory Mexico.<\/p>\n

According to Musk\u2019s statements during the call, Tesla is focused on reaching for its highest possible sales volumes right now, with the expectation that it will offer a platform for even more revenue in the future. While there\u2019s no way to predict what may happen to\u00a0Tesla\u2019s stock<\/a>\u00a0in the coming months and years, Nga says shareholders should focus on long-term potential for gains, rather than short-term pain.<\/p>\n

===<\/p>\n

Source:\u00a0The Motley Fool<\/em><\/a><\/p>\n","protected":false},"excerpt":{"rendered":"

This article comes to us courtesy of\u00a0EVANNEX, which makes and sells aftermarket Tesla accessories. The opinions expressed therein are not necessarily our own at\u00a0InsideEVs, nor have we been paid by\u00a0EVANNEX\u00a0to publish these articles. We find the company’s perspective as an aftermarket supplier of Tesla accessories interesting and are happy to share its content free of […]<\/p>\n","protected":false},"author":1,"featured_media":8313,"comment_status":"closed","ping_status":"closed","sticky":false,"template":"","format":"standard","meta":{"site-sidebar-layout":"default","site-content-layout":"","ast-site-content-layout":"default","site-content-style":"default","site-sidebar-style":"default","ast-global-header-display":"","ast-banner-title-visibility":"","ast-main-header-display":"","ast-hfb-above-header-display":"","ast-hfb-below-header-display":"","ast-hfb-mobile-header-display":"","site-post-title":"","ast-breadcrumbs-content":"","ast-featured-img":"","footer-sml-layout":"","ast-disable-related-posts":"","theme-transparent-header-meta":"","adv-header-id-meta":"","stick-header-meta":"","header-above-stick-meta":"","header-main-stick-meta":"","header-below-stick-meta":"","astra-migrate-meta-layouts":"default","ast-page-background-enabled":"default","ast-page-background-meta":{"desktop":{"background-color":"","background-image":"","background-repeat":"repeat","background-position":"center center","background-size":"auto","background-attachment":"scroll","background-type":"","background-media":"","overlay-type":"","overlay-color":"","overlay-opacity":"","overlay-gradient":""},"tablet":{"background-color":"","background-image":"","background-repeat":"repeat","background-position":"center center","background-size":"auto","background-attachment":"scroll","background-type":"","background-media":"","overlay-type":"","overlay-color":"","overlay-opacity":"","overlay-gradient":""},"mobile":{"background-color":"","background-image":"","background-repeat":"repeat","background-position":"center center","background-size":"auto","background-attachment":"scroll","background-type":"","background-media":"","overlay-type":"","overlay-color":"","overlay-opacity":"","overlay-gradient":""}},"ast-content-background-meta":{"desktop":{"background-color":"var(--ast-global-color-5)","background-image":"","background-repeat":"repeat","background-position":"center center","background-size":"auto","background-attachment":"scroll","background-type":"","background-media":"","overlay-type":"","overlay-color":"","overlay-opacity":"","overlay-gradient":""},"tablet":{"background-color":"var(--ast-global-color-5)","background-image":"","background-repeat":"repeat","background-position":"center center","background-size":"auto","background-attachment":"scroll","background-type":"","background-media":"","overlay-type":"","overlay-color":"","overlay-opacity":"","overlay-gradient":""},"mobile":{"background-color":"var(--ast-global-color-5)","background-image":"","background-repeat":"repeat","background-position":"center center","background-size":"auto","background-attachment":"scroll","background-type":"","background-media":"","overlay-type":"","overlay-color":"","overlay-opacity":"","overlay-gradient":""}},"footnotes":""},"categories":[4],"tags":[],"class_list":["post-49137","post","type-post","status-publish","format-standard","has-post-thumbnail","hentry","category-e-cars"],"_links":{"self":[{"href":"http:\/\/autosector.com\/index.php?rest_route=\/wp\/v2\/posts\/49137","targetHints":{"allow":["GET"]}}],"collection":[{"href":"http:\/\/autosector.com\/index.php?rest_route=\/wp\/v2\/posts"}],"about":[{"href":"http:\/\/autosector.com\/index.php?rest_route=\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"http:\/\/autosector.com\/index.php?rest_route=\/wp\/v2\/users\/1"}],"replies":[{"embeddable":true,"href":"http:\/\/autosector.com\/index.php?rest_route=%2Fwp%2Fv2%2Fcomments&post=49137"}],"version-history":[{"count":0,"href":"http:\/\/autosector.com\/index.php?rest_route=\/wp\/v2\/posts\/49137\/revisions"}],"wp:featuredmedia":[{"embeddable":true,"href":"http:\/\/autosector.com\/index.php?rest_route=\/wp\/v2\/media\/8313"}],"wp:attachment":[{"href":"http:\/\/autosector.com\/index.php?rest_route=%2Fwp%2Fv2%2Fmedia&parent=49137"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"http:\/\/autosector.com\/index.php?rest_route=%2Fwp%2Fv2%2Fcategories&post=49137"},{"taxonomy":"post_tag","embeddable":true,"href":"http:\/\/autosector.com\/index.php?rest_route=%2Fwp%2Fv2%2Ftags&post=49137"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}