Tesla (TSLA 6.66%) is emerging as one of the iconic brands in the world. The company's 51% growth in revenue last year, which came on top of the worst year for auto sales in more than a decade, speaks volumes about its brand power.   

But this strong performance didn't help the stock. Investors can blame an expensive valuation but also Tesla's price cuts on certain models, which have analysts concerned about margins and whether demand will hold up in a recession. After jumping 52% year to date, the stock is still down from the year-ago highs. 

But these concerns pale in comparison to more-important competitive strengths for the company. Let's look at three aspects of Tesla's business that smart investors know will ultimately grow value for shareholders.

1. Tesla is expanding its addressable market

Recent price cuts don't reflect weak demand but are part of management's long-term goal to make its cars more affordable and, therefore, widen its addressable market. Part of that goal is expanding its roster of electric vehicles (EVs).

Trucks and SUVs are some of the best-selling vehicles every year. In fact, the three top-selling light vehicles in the U.S. last year were all pickups, according to Car and Driver. And Tesla will soon begin its journey to capture more of the truck market with the launch of its Cybertruck. 

Tesla Cybertruck

The Tesla Cybertruck. Image source: Tesla.

Trucks are a key missing piece in Tesla's lineup if it wants to capture a larger share of auto sales. There are around 15 million total light-vehicle sales every year, according to Statista. The best-selling pickups sold around 500,000 units each in 2022, more than Tesla's total deliveries across its lineup in the fourth quarter. 

While the Cybertruck is expected to launch this year, it will not be a significant contributor to Tesla's bottom line until 2024, as CEO Elon Musk told investors on the fourth-quarter earnings call. But the design of the truck points to key competitive advantages for Tesla that investors should bank their money on.

2. Tesla is finding ways to save money

The large stainless-steel panels that make up the exterior of the Cybertruck don't resemble anything else on the road today. The materials and design required Tesla to rethink its manufacturing process. 

For example, the traditional way of building a car is putting together the panels (or the body) first, then taking the doors off and installing the interior parts (e.g., the seats, engine, et cetera). This means the team working on the interior components must wait until the team working on the panels finish their job before starting assembly.  

Tesla came up with a more-efficient process that allows different teams to work on the assembly at the same time. It refers to this improvement as an increase in space-time efficiency, which the company says improved by 30% with its next-gen vehicles.  

Tesla's investor day presentation of improvement in manufacturing efficiency.

Image source: Tesla's 2023 Investor Day.

These manufacturing improvements also speak to management's willingness to cut prices on its vehicles. Tesla is working to make its EVs more affordable while at the same time making strides to cut costs in innovative ways.

The company saw a dip in operating margin toward the end of 2022, but it finished the year at nearly 17% -- double the margin of Ford and General Motors. The development of the Cybertruck and other next-gen vehicles might continue to increase Tesla's profitability.

TSLA Operating Margin (TTM) Chart

Data by YCharts. TTM = trailing 12 months.

With $13.8 billion in operating profit, Tesla has ample resources to reinvest in new technologies and lead the charge in the EV industry. 

3. Tesla's brand is growing in value

At a forward price-to-earnings ratio of 45, Tesla stock is very expensive for a car manufacturer, but this is a brand that is continuing to grow in value. Many people aspire to own a Tesla, a quality that is impossible to value precisely.

Among the top companies scored in Brand Finance's annual ranking of the most valuable brands, Tesla saw the biggest jump, moving from No. 28 to No. 9 on the list. With a recent $581 billion market cap, investors cast their vote a long time ago, but this move in the ranking is significant.  

As management continues to cut prices on its cars and expand its lineup, Tesla could continue to climb toward the top of the list.

While Wall Street is worried about the impact a possible recession might have on near-term demand, Tesla's advantages in delivering affordable EVs, while improving its manufacturing process to retain industry-leading profitability, are the key factors that will deliver returns to investors over the long term.