Stock Market

TSLA Stock Analysis: Where Will Tesla Be in 10 Years?

You don’t need a deep Tesla (NASDAQ:TSLA) stock analysis to tell you it’s the worst-performing stock of the Magnificent Seven in 2024 so far. The EV maker has different issues than those confronting rival Rivian (NASDAQ:RIVN), which just reported terrible earnings that sent its stock careening lower. But the general EV market malaise is heavy enough to weigh on the industry, Tesla included.

However, the TLSA also has more in its favor than most other car companies. It might be a bumpy ride for Tesla investors in the immediate future, but what does a TSLA stock analysis say about the longer term? Let’s take a look at where an investment in Tesla might be 10 years down the road.

EV Demand and TSLA Stock

High interest rates make financing a new car purchase prohibitively expensive for many. Rivian produced over 17,500 vehicles in the fourth quarter, 8% more than the previous quarter, but delivered 10% fewer vehicles, or under 14,000 cars than it did in the third. For the coming year the luxury EV maker sees production being essentially flat at 57,000 vehicles.

It wasn’t much better at luxury EV peer Lucid Motors (NASDAQ:LCID), which expects to produce just 9,000 vehicles in 2024, a slight increase over last year, but a far cry from the 22,600 EVs analysts expected.

Industry EV sales growth is declining at a faster rate than many thought. Ford (NYSE:F) slashed its F-150 Lightning production in half while GM is standing on the brakes of its own EV production schedule. 

Although Tesla hasn’t provided hard production numbers for the coming year, it did say, “vehicle volume growth rate may be notably lower than the growth rate achieved in 2023.” 

Big Fish Small Pond

There is a shakeout coming to an EV market that is much smaller than analysts believed. The early adopters already bought their cars but consumers aren’t convinced EVs are worth it. They are hedging their bets. Where EV sales are slowing, Toyota (NYSE:TM) is seeing tremendous growth in its hybrid vehicle lineup. It suggests buyers don’t fully trust the battery EV and want a fossil fuel backup plan.

Tesla won’t quite be the last man standing, but it will be standing taller than most. It revolutionized and popularized EVs when they were still quirky, not-ready-for-prime-time alternatives. Today, it is the premiere EV company and a growing carmaker overall.

Tesla generated $82 billion in EV sales last year, up 15% from the year before. It also earned $8.9 billion in operating profits, which was a 35% drop year over year. Still, almost 1.85 million EVs were produced in 2023 and Tesla delivered 1.8 million of them. 

Not only does Tesla dominate the EV market with a 55% share despite growing competition but it owns a better than 4% share of the entire automobile market. Its share is bigger than Mercedes-Benz (OTCMKTS:MBGAF), BMW (OTCMKTS:BMWYY), Subaru (OTCMKTS:FUJHY), and Volkswagen (OTCMKTS:VWAGY).

Yet trading at 45 times trailing earnings and going for 6 times sales, TSLA stock is still richly valued. The next decade is going to be a tougher slog than the last 10 years. Tesla won’t be a bust like Rivian and Lucid but I don’t see it outperforming the market either. The share price will have to come down significantly from these levels to make TSLA stock a buy.

On the date of publication, Rich Duprey did not hold (either directly or indirectly) any positions in the securities mentioned in this article. The opinions expressed in this article are those of the writer, subject to the InvestorPlace.com Publishing Guidelines.

Rich Duprey has written about stocks and investing for the past 20 years. His articles have appeared on Nasdaq.com, The Motley Fool, and Yahoo! Finance, and he has been referenced by U.S. and international publications, including MarketWatch, Financial Times, Forbes, Fast Company, USA Today, Milwaukee Journal Sentinel, Cheddar News, The Boston Globe, L’Express, and numerous other news outlets.

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