It is not out of line to expect high gas prices to mean good things for electric vehicle (EV) producers, and so it should be with electric vehicle giant Tesla (TSLA). Indeed, reports note that deliveries are up for Tesla, and this could be a trend that sticks around a while. But investors were clearly skeptical, and sold off shares sufficiently to send prices slumping over 4% in Thursday afternoon’s trading.
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New trading tool for TSLA bearsThe fact that there was any rise at all is actually noteworthy in and of itself. It comes at a time when there is no federal tax credit to support these purchases, and it also comes when Tesla has fewer models available for purchase than ever thanks to its discontinuing the Model S and Model X.
Yet automakers caution that it usually takes “several months” of sustained high gas prices to make customers pivot to more fuel-efficient cars. Indeed, there are some signs the Iran War could be over in a matter of weeks, if all goes as planned. But with interest on the rise for electric vehicles and hybrid cars alike, there are at least some signs this trend could be one to watch going forward.
Fighting Hard for a Shrinking Pie
Meanwhile, at a time when Tesla has fewer models to offer up than ever, it has a new competitor to face as well. Toyota (TM) is getting into the market with a line of “Tesla-killer” cars. It currently offers four EV models in the United States, and a fifth one is set to join the lineup by the end of April.
Toyota North America executive vice president and chief operating officer Mark Templin noted, “We’re coming into the marketplace with multiple options for our customers at a time when people are looking for new options. If we get 15% of the overall market, we should be able to get 15% of the BEV market.” With brisk demand in place for Toyota’s hybrids, it is easy to wonder why Toyota does not simply focus on those. It could just be a matter of trying to pull forward future business to today.
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 seven Sells assigned in the past three months, as indicated by the graphic below. After a 42.64% rally in its share price over the past year, the average TSLA price target of $395.31 per share implies 8.63% upside potential.
