Daily Brief - Tesla's Tumble

TLDR: Tesla's recent stock tumble, marked by 4.9% drop yesterday following its delivery numbers, underlines emerging challenges for the EV giant.

For the first three months of the year, Tesla announced global deliveries of 386,810, substantially below estimates of 449,080. The delivery shortfall has been partly attributed to production bottlenecks in Tesla's Fremont and Berlin factories, alongside potential demand issues as hinted by the incremental inventory.

Tesla's strategic challenges are compounded by the competitive dynamics in China, where it has suffered a slowdown amidst a burgeoning price war initiated by BYD.

Despite BYD reporting a 42% fall in its EV deliveries for the same period, the automaker managed to post a substantial overall quarterly sales volume when including plug-in hybrids, alongside pure battery and hydrogen-powered cars.

This growth, though modest, highlights the fierce competition Tesla faces, particularly from Chinese manufacturers in the company's single-largest market outside of the US.

Tesla's situation is further complicated by its aging vehicle lineup and the lack of a new mass-market vehicle expected until late 2025. This gap presents an opportunity for competitors who continue to innovate and expand their model lineup aggressively.

Market Movers: When Tesla falls

Here is the historical 1-month response from EV companies when Tesla is down 33% YTD:

1. Tesla: 16.46%
2. Lucid Group: 14.38%
3. Li Auto ADR: 11.52%
4. General Motors: 6.56%
5. Ford: 2.59%
6. Toyota Motor ADR: 1.90%
7. Vinfast Auto: 0.69%
8. Xpeng Inc ADR: 0.10%
9. Polestar Automotive Holding Uk Plc: -0.27%
10. Rivian Automotive Inc: -3.84%
11. Nio ADR: -5.28%

Scenario Spotlight: General Motors valuation

On March 19th, Toggle highlighted that General Motors forward P/E was at a level, which historically was followed by median upside in the stock - GM is up almost 10% since then.

Looking ahead, GM stock could face downside in the short term (refer to above diagram) based on historical episodes of the stock's forward P/E crossing above 5x.

Sneak Peek 🤫: Oversold EV stocks

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