It's been more than 20 years since Tesla (TSLA 0.66%) was founded, and 15 years since it made its first electric vehicle (EV). It's been a mainstream, mass-produced brand of cars for over a decade, in fact. And yet, the evolving company is still making as many headlines now as it ever has. Maybe more.
Not all of these headlines are bullish for Tesla stock, mind you. The EV manufacturer along with its CEO seem to be on the defensive these days. That's a big reason why Tesla stock is down by more than 50% from its late-2021 peak, and still teasing a new 52-week low; this sell-off and all the drama causing it are keeping investors guessing as to what's next for the storied company.
If all of this uncertainty is making it difficult for you to make a decision on the stock, it's time to take a step back and look at the bigger picture. Here's what (still) matters most about Tesla, for better or worse.
Strengths
The iconic electric vehicle maker has several things going for it. Four of them stand out above the rest.
1. It's still the most revered brand
Let's face it. While lots of other manufacturers now are making electric vehicles, Tesla remains the premier brand in the business. Not only did Kelley Blue Book name it as 2023's brand image winner among EVs, but Tesla also topped long-established makers of combustion-powered cars in several different luxury vehicle categories. Its reputation is similar overseas as well. The well-respected name certainly helps keep Tesla at the top of consumers' minds when they're in the market for an electric vehicle.
2. Highly integrated production
Many carmakers handle a good deal of their manufacturing process these days. Few carmakers, however, do as much in-house as Tesla does. From stamping its own aluminum chassis to assembling its cars to manufacturing its own battery packs, this company can customize every facet of EV production. Not only does this make it easier to build a new car from the ground up, it also means Tesla isn't waiting on parts from a third-party manufacturer that may be unexpectedly delayed.
3. Focused, and fiscally flexible as a result
Yes, the company makes at-home energy storage solutions along with solar panel shingles. These aren't exactly distracting side projects though. That is to say, Tesla remains 100% focused on making some of the world's very best electric vehicles.
That's in contrast with traditional combustion-powered carmakers like Ford Motor Company and General Motors, which are struggling to manage waning demand for gas-powered vehicles at the same time they're investing in their nascent EV businesses. This transition is proving expensive for an already fiscally beleaguered auto industry, with the exception of EV-focused Tesla, which has been consistently profitable since 2020. This profitability allows the EV maker to maneuver as needed.
4. A diverse product lineup
Finally, although this wasn't always the case, Tesla now offers a vehicle for every budget. Its lowest-priced cars start in the ballpark of $40,000, while consumers looking for more luxury or better performance can spend over $100,000 on a Tesla and still get their money's worth. And, of course, there are plenty options in between those two extremes. This wide range of price points means Tesla's got something to sell to anyone willing and able to own a car.
Weaknesses
Not everything is working to Tesla's advantage. There are matters that should concern prospective shareholders. Here are four top challenges at this time.
1. Elon Musk draws sometimes contrasting reviews
There was a time when Chief Executive Officer Elon Musk was lauded as visionary who was saving the world by mainstreaming clean, environmentally friendly automobiles. Perhaps, not as much now. Ever since his 2022 acquisition of Twitter and subsequent questions about certain kinds of online speech, Musk has been a bit in the hot seat. It's not a stretch to wonder if his well-publicized comments may sometimes be adversely impacting Tesla stock's price.
2. Not enough owner-support infrastructure
Most Tesla owners love their cars. But owning them isn't always convenient. There's a distinct lack of ways to charge their batteries away from home. As Motley Fool's own research indicates, there are only 1,974 Tesla charging stations supporting 21,852 Supercharger ports peppered across the United States, and most of those are found in more metropolitan areas.
For perspective, the National Association of Convenience Stores estimates there are on the order of 145,000 gasoline filling stations in the U.S., each with several pumps that can fill up a car's gas tank in a matter of minutes. Things aren't remarkably different outside of the United States either. For anyone driving a Tesla on a lengthy trip, it takes quite a bit of careful planning.
3. Interest in electric vehicles is peaking
This recharging worry is a big reason that interest in purchasing EVs is slowing although it's not the only reason. The end of subsidies, worries about the sky-high cost of replacing EV batteries, and the still-lofty price of electric vehicles are all part of the reason U.S. consumers' interest in owning an EV has fallen from 49% as of late 2022 to 41% now, according to a recent report from the Jerry data company. The same trend is evident overseas.
4. Competition is (finally) getting serious
Last but not least, at the same time that consumers are falling out of love with the idea of all-electric vehicles, Tesla's top competitors are stepping up their games. Sales of China's BYD's electric vehicles eclipsed Tesla-made EV sales during the final quarter of last year.
Domestically, General Motors is sticking with its plans to altogether stop making combustion-powered vehicles by 2035. Ford is slowing its electric vehicle plans down just a bit although it still intends to begin manufacturing a battery-powered version of its popular Explorer SUV in the middle of this year, with the debut of another new EV planned before the end of 2024.
Most of Tesla's rivals may be regrouping, but they're certainly not going away. They're just figuring out ways to sell more electric vehicles at a lower price in the future.
Would-be Tesla investors should look elsewhere -- for now
Don't misread the message. Tesla isn't doomed. It'll be fine. It will probably even remain the premier name in the EV business. But for investors interested in taking a shot on Tesla stock while it's down, there needs to be fewer serious concerns currently to Tesla's business.
For most of its existence, Tesla enjoyed a free hand, creating a market in which it was essentially the only name around. That's no longer the case. Investors have never had to price Tesla stock while the company's been on the defensive to the degree it is now.
Right now, you're better served by looking at other investment prospects while waiting to see just how well Tesla handles its newly established challenges.
