Stock of the Week: Tesla

Can the brand and batteries be beat?

Andrew Willis 9 November, 2020 | 4:28AM
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Andrew Willis: We’ve been seeing a lot of ‘Tesla competitors’ pop up lately, with varying degrees of progress and credibility. So, let’s revisit the electric vehicle company’s ability to fend off rivals – and consider for how long it can keep it up…

Tesla’s proven it’s able to turn a profit and deliver an increasing number of vehicles, but we think their special ingredients are the brand and the batteries. We like what Elon’s done with the brand and its ability to generate lasting media attention. As sector strategist David Whiston notes, Tesla’s brand ‘cachet’ or prestige won’t be diminished any time soon.

Tesla’s been positioned as a premium brand - at a premium price - from the start, which gave it a “halo effect”. Also, it has a personality that’s as hard to replicate as it is to make a Cybertruck visually appealing.

On the battery-front, the recently announced ability to reduce costs by 56% is a potential game-changer, as we think it could take current major automakers years to catch up - if they can ever catch up.

These are major obstacles that add a little context to Tesla’s first-mover advantage. But investors should remember that the EV race is far from over – with a decade or more to go before we know the winner. And Tesla’s current stock price represents immense growth expectations for the company, and ironically this premium brand won’t see consumers switching in large numbers to electric vehicles until the prices come way down.

For Morningstar, I’m Andrew Willis.


Editor's Note: All images are courtesy of and AP Images. 

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Securities Mentioned in Article

Security NamePriceChange (%)Morningstar Rating
Tesla Inc149.93 USD-3.55Rating

About Author

Andrew Willis

Andrew Willis  is Senior Editor at Morningstar Canada. He previously produced content for Fidelity Investments and finance industry events for Euromoney Institutional Investor and has written in the past for Thomson Reuters and CNN. Follow him on Twitter @Andrew_M_Willis.

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