While the loss of tax incentives was a huge blow to electric vehicle giant Tesla (TSLA), the good news is that Tesla drivers tend to stay Tesla drivers. This suggests that Tesla is not likely to lose ground going forward, though its growth may prove limited. This was demonstrated by the S&P Global Mobility Automotive Loyalty Awards, which gave Tesla no shortage of accolades. Investors gave the biggest reward of all, and sent shares up fractionally in Friday afternoon’s trading.
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The awards give credit to brands that keep their customers around the longest, and Tesla won several of these awards itself. Tesla came out tops in the “Overall Loyalty to Make,” “Ethnic Loyalty to Make,” and “Highest Conquest Percentage” categories. The “Overall Loyalty to Make” award came as kind of an eleventh-hour surprise, with a “…late-year shift in consumer buying patterns” helping to push it over the line.
This is actually the fourth year in a row Tesla has won the Overall Loyalty to Make award, reports noted. This is also the sixth year in a row Tesla has won the Highest Conquest Percentage award, a gauge of Tesla’s ability to bring in buyers from other brands. As for the Ethnic Loyalty to Make, this came as a result of Asian and Hispanic drivers proving to be particularly fond of Tesla vehicles. Tesla has a loyalty rate of 63.5% in Asian households, and 61.9% with Hispanic households.
A New Connection
While Tesla is widely known as a powerhouse in technology, it actually does not make all of its own technology. Some of the tech is actually imported. In fact, Tesla revealed that it recently kicked off a new partnership, bringing in Samsung (SSNLF) for its 5G modems.
It should not be a surprise that Tesla vehicles depend on connectivity to carry out many of their functions, which means that a fast modem with proper connection speeds is vital to the operation. Samsung has been making modems for decades, though mainly for smartphones and the like. This will make for a bit of a challenge. Samsung understands small, portable modems, but automotive modems need to be somewhat more robust. Interestingly, Samsung is already on deck to supply AI6 chips to Tesla as well, showing Tesla’s interest in pulling its supply chain into the United States and Korea.
Is Tesla a Buy, Hold or Sell?
Turning to Wall Street, analysts have a Hold consensus rating on TSLA stock based on 12 Buys, 11 Holds, and eight Sells assigned in the past three months, as indicated by the graphic below. After a 2.83% rally in its share price over the past year, the average TSLA price target of $394.12 per share implies 10.04% downside risk.
