While electric vehicle giant Tesla (TSLA) has been frantically trying to build up sales in China, the Chinese-make LG batteries in these cars are proving to be more of a problem than expected, as one repair shop is reporting “catastrophic failure rates” in Model 3 and Model Y cars that use these batteries. Yet investors were oddly unfazed, and shares notched up fractionally in Monday afternoon’s trading.
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The repair shop in question, reports note, is actually one of the leading names in electric vehicle repair in Europe, EV Clinic. It is raising concerns about LG battery packs over their Panasonic (PCRFF) equivalents. The LG battery packs not only have a shorter life span than the Panasonic models, but also fail completely at increased rates.
Most of the time, this was not a concern. The move to lithium iron phosphate (LFP) batteries was commonly well-received, and the CATL (CYATY) batteries sourced from China were considered quite durable. The LG batteries, though, are nickel manganese cobalt (NMC) batteries, and are apparently not nearly as robust as their CATL equivalents. By way of comparison, EV Clinic found that the Panasonic packs yielded about 250,000 miles. The LG models, though, died around 150,000. Worse, “cell-level repair” on an LG pack is considered “impossible” by EV Clinic tests.
What Would Elon Buy?
Elon Musk does not really “buy stocks,” reports note. If he were to do so, however, he does have some he believes would be better picks than others. For instance, he believes that Alphabet (GOOG) has “…laid the groundwork for an immense amount of value creation from an AI standpoint.” That should make it worth considering as an investment.
He feels similarly about Nvidia (NVDA) as well, calling it “obvious,” thanks to its connection to artificial intelligence and the game-changer that will represent. Finally, he pointed to his own collection of holdings, suggesting a certain amount of convergence may be in the future over “…solar-powered AI satellites” to harness solar energy more fully.
Is Tesla a Buy, Hold or Sell?
Turning to Wall Street, analysts have a Hold consensus rating on TSLA stock based on 13 Buys, 11 Holds, and 10 Sells assigned in the past three months, as indicated by the graphic below. After a 20.47% rally in its share price over the past year, the average TSLA price target of $383.04 per share implies 10.81% downside risk.
