Stocks That Could Be Like Tesla: It took nearly two decades for Tesla to achieve success. The company started off in 2003 as the brainchild of a small group of engineers. They set out to prove that electric cars could outshine their gasoline counterparts in everything from performance to driver experience. However, it was slow going. The technology necessary for creating the cars Tesla’s founders envisioned had not yet been invented.
Elon Musk became Tesla’s leader in 2004, and he pushed hard to achieve the promise of a fossil-fuel-free future. Despite his brilliance – and the introduction of several award-winning cars – there wasn’t much action for Tesla investors. From the time the company went public in 2010 until the end of 2019, stock prices rarely broke $70 per share.
Suddenly, in a shift that shocked nearly everyone in the financial world, Tesla stock took off in 2020. It went from less than $90 per share in January of that year to an astonishing high of more than $900 per share just 12 months later. That’s an increase in excess of 700 percent. For a period, Musk was officially the richest person in the world, even surpassing Amazon’s Jeff Bezos.
Yes, share prices have since come down a bit, but that doesn’t detract from Tesla’s achievement. The company put a lot of work into developing the world’s most sophisticated electric cars, and it is finally turning a profit. Now investors want to know, are there other stocks that could be like Tesla?
What Could Be The Next Tesla?
It is now abundantly clear that electric vehicles are here to stay. Tesla has proven that it’s possible to be profitable in this space, and consumers are gradually shifting to green alternatives in lieu of their gasoline engines.
In 2020, electric vehicle sales hit 1.7 million, and that figure is expected to increase to 26 million by 2030. In 2040, electric vehicles will surpass 54 million – a large majority of the 70 – 80 million new cars that are sold worldwide each year.
China, with a population of more than 1.4 billion, is the largest automotive market on the planet. That means Chinese electric vehicle maker Nio (NIO) is in a solid position to capture a large share of the growing electric vehicle market – particularly because it has gained a dedicated following as a result of its innovative battery swap program. Some investors in search of the next Tesla are convinced that Nio is their answer.
Xpeng (XPENG) is also a Chinese electric vehicle company, so it enjoys the same benefits of being in the right place at the right time to lead China’s electric vehicle revolution. It has gained investor attention because – like Tesla – it is very involved in exploring autonomous driving solutions.
Given its success thus far, It appears that Xpeng may be one of the first to take autonomous driving mainstream. That’s appealing to investors who want to be on the cutting-edge of automotive disruption.
Is Nio Stock Like Tesla?
Nio is referred to as the “Tesla of China” because the two companies share a number of similarities. Both develop cars that satisfy consumer expectations for style, handling, and tech-based features, but they aren’t over the top. That means that while both companies currently cater to a higher-end clientele, they aren’t limited to the top five percent of earners.
With that said, both companies are working on versions of their vehicles that can deliver most of the style and features while staying in an upper-middle-class price range. That will expand the market for both Nio and Tesla, increasing sales and eventually profits.
Both companies’ stocks behave in a similar manner, and both are expensive, relatively speaking. Investors expect Tesla and Nio to lead the electric vehicle industry in the United States and China respectively, and as such, they are willing to pay a large premium for Tesla and Nio stock.
Who Are Tesla’s Biggest Competitors?
It’s a complicated time to be Tesla. Investors have rewarded the company’s years-long effort to transform the image of electric vehicles, and now that it has succeeded, every automaker in the world is ready to go to battle for a share of the electric vehicle market.
Ford (F), Volkswagen, and General Motors (GM) are hard at work on their own electric product lines, and that presents a problem. If they can develop electric vehicles that meet the expectations of mainstream consumers, their years of experience in automotive manufacturing and sales gives them a distinct advantage over relative newcomer Tesla.
What Is The Potential Of Tesla Stock?
Tesla is a fascinating case because it illustrates the truth in that old adage, “First they ignore you, then they laugh at you, then they fight you, then you win.” In its early years, no one believed that electric engines could pose a threat to traditional internal combustion engines. Tesla was all but ignored.
When Tesla rolled its first creations off the manufacturing line – vehicles that fulfilled all of the promises made by the company’s founders – automakers and market analysts laughed. They acknowledged that Tesla created exceptional electric vehicles, but they smugly stated that the company could never sell enough of them to turn a profit.
Of course, after 2020, no one is laughing. In fact, every member of the automotive industry is scrambling to get on the electric vehicle bandwagon, and they are planning to fight Tesla for every sale. Will Tesla ultimately come out ahead? A growing number of industry experts say yes.
Tesla’s long history in the electric vehicle industry gives it a first-mover advantage, which is a strong position. But that’s not the only reason Tesla stock has a bright future. The company is already deep into work on what is expected to be the next step in transportation-related technology: autonomous vehicles and ride-hailing services. If it can achieve its goals in that area before its competitors, share prices are likely to see another massive jump.
However, the company’s future financial success is far from certain, and some industry analysts remain firmly convinced that buying Tesla is a mistake – dip or no dip. By any standard measure, Tesla is grossly overvalued – a condition that could resolve with a painful correction that wipes out value for those who buy now.
It’s a risk – which is why investors are focused on stocks that could be like Tesla but are not yet trading at exorbitant prices.
Stocks That Could Be Like Tesla: The Bottom Line
The bottom line is that, in many ways, Tesla is unique. It seems unlikely that any car company can recreate the mystique of Elon Musk’s world. However, there are stocks that could be like Tesla from the perspective of delivering shareholder returns through steep growth. Right now, Nio and Xpeng (XPEV) are top contenders for that spot.
The author has no position in any of the stocks mentioned. Financhill has a disclosure policy. This post may contain affiliate links or links from our sponsors.