Can Tesla, with a market capitalisation of more than $70 billion, hold on to the “third in the world”?

For nearly six months, whatever concerns Wall Street analysts may have expressed, it has not stopped Tesla’s share price from soaring. Tesla hit a new high on Thursday, surpassing $400 for the first time, after hitting a new $70 billion share price on Wednesday, according to Sina Financial News. By Thursday’s close, the stock was up 2.77 percent at $404.04.

It was the first time Tesla had closed above $400 since it went public on June 29, 2010, and had not exceeded $400 in the previous session. The market capitalisation of $72.826bn has once again been refreshed, making it the world’s third-largest carmaker, behind Japan’s Toyota and Germany’s Volkswagen.

As we all know, Tesla is currently a big driver in the electric car industry, and in many cases sales even exceed the popular ity of traditional luxury brands of the same class. Not only in the U.S. market electric vehicle sway, in the international market is also a constant action. Shares have surged in the current trend of new energy vehicles and are favored by several analysts, who have predicted a doubling of Tesla’s share price to about $800. It is clear that Tesla still has plenty of prospects for the future.

However, looking out, in the new energy track, there are still a lot of strength of the opponent. For example, for example, the traditional luxury brand BBA is also rolling out its own electric cars, the European market Germany has also increased subsidies for electric vehicles, or after entering China to face the rise of electric car brands in China, which will have a corresponding impact on Tesla. It can be imagined that the future of electric vehicles, will still be in a long-term game, the field of electric vehicles is really “wolf.” However, we may have to look at the current surge in Tesla’s share price in a number of ways.

Can Tesla, with a market capitalisation of more than $70 billion, hold on to the "third in the world"?

What touched this point when Tesla’s share price soared?

We can trace the surge in Tesla’s stock price back to August 2018. At the time, Tesla’s share price soared to $379, the second-highest price on record, after Musk said he “considered privatizing Tesla,” and in late October, Tesla reported a profit of $143 million in the third quarter, pulling its share price up another 20 percent. This time, the share price has soared again, even surpassing the market capitalisation of companies such as Daimler and BMW, or being created for multiple reasons.

First, or to benefit from the reform of America’s electric vehicles, which have preferential policies. In mid-December, the federal government re-enacted the Green Energy Act of 2019, which proposes raising the threshold for sales of 200,000 electric vehicles to 600,000, reducing subsidies from $7,500 to $7,000. It’s only a draft proposal, but it’s certainly good news for Tesla. You know, earlier U.S. policies are that Tesla’s users are no longer eligible for subsidies in terms of current sales.

Moreover, the launch of its electric pickup, Cybertruck, is seen by many analysts as a growth point for Tesla. Orders of 250,000 vehicles in five days, even in an international place with a strong pickup culture like the United States, are not easy.

In addition, on the news level, Bloomberg quoted people familiar with the matter as saying that Tesla is considering cutting the price of the Model 3 model made at the Shanghai super factory by 20 percent or more, and that the price cut may begin in the second half of next year, but Tesla China officials later said the news was not official information. Although the domestic Model 3 will eventually reduce the price is still not real lying, but the real positive Tesla also has a lot. The accelerated completion of Tesla’s Shanghai Super plant, the home-made Tesla Mode 3, has officially begun production and is scheduled to begin delivery by the end of the year. Tesla’s sales in China are expected to reach 150,000 vehicles by 2020, based on capacity.

Not only that, but Tesla announced in November that it would build a European super plant in Berlin, but the plant will be built much longer than the Chinese plant and is expected to start production in 2021. According to Musk, Tesla’s ultimate goal is to build 10 to 12 electric car manufacturing plants around the world. Apparently, Musk has turned his perspective to every corner of the world, with wide-ranging, powerful, and a flurry of good news that has given analysts a boost. Morgan Stanley recently even raised its bullish Tesla target price to $500, and strong sales growth in China cited strong sales as one of the reasons for its increase.

Tesla has added charging piles to China as sales grow in the country to cope with the coming charging pressure. On December 9th Tesla announced that it had more than 300 super charging stations in mainland China. So far, Tesla’s super charging network has covered more than 140 cities in China, running more than 2,200 super charging piles, with more than 2,100 destination charging piles. As can be seen, Tesla has spared no effort in the Chinese market.

On the other hand, with so much good news, Tesla’s share price is a little unreasonable if there is no big change. The U.S. stock market believes that Tesla’s future prospects have an optimistic side, but should also be cautious. After all, the overall environment for new energy vehicles is still uncertain. As a result of the general trend, the competition on this track will become more intense. And in the Chinese market will also face some uncertainty factors.

Can Tesla, with a market capitalisation of more than $70 billion, hold on to the "third in the world"?

The story of “wolf coming” in the new energy vehicle space has begun.

In Tesla’s case, the new energy vehicle sector has really been ahead of the time, and now its share price is at a record high. But in fact, Tesla’s challenge struck a broader, and as the trend became clearer, more and more car companies began to focus on the sector, and competition intensified. In terms of product quality, Tesla still has barriers to breaking through.

1, new energy vehicles in the international market are gradually being valued to form a direct impact on Tesla

Globally, Tesla does have a hard time finding a rival to its new energy vehicles, but that doesn’t mean Tesla can rest easy. Now, new energy vehicles have gradually been paid attention to by governments, the major car companies have released the launch of new energy vehicles news.

Germany, a big car nation, has previously offered relatively large subsidies for new energy vehicles, with data showing a maximum of 6,000 euros per vehicle, which also shows the importance it attaches to electric vehicles. It is conceivable that the increase in subsidies to electric cars by big-car countries has been a clear boon to Volkswagen and others, a competition that Tesla cannot ignore.

In addition, the traditional car brand BBA is also in the new energy field. Notably, Audi’s e-tron sales surpassed Tesla’s in October. In addition, according to media reports, on December 19th BMW Group sold more than half a million electric vehicles worldwide, equivalent to one electric car sold every four minutes. On the 12th of this month, it was revealed that the Mercedes-Benz Dusseldorf plant has welcomed the official start-up of the eSprinter all-electric model, while Mercedes-Benz has set a goal of achieving 0 carbon emissions from the truck production process by 2022. Depending on the configuration, the range of the eSprinter all-electric vehicle model starts at 115 km.

From these points of view, shows the traditional car brand in the field of electric new energy vehicles strength and confidence. Once the traditional car brand is strong, it will undoubtedly intensify the battle in the field of new energy vehicles, and there will be direct competition for Tesla. Moreover, traditional car brands still have a clear advantage, with data showing that toyota, Ford and other car companies still top the list of car sales. It can be seen that new energy vehicles want to dominate, or a long process.

2, the Chinese market performance eye-catching, but the competition can not be ignored

In fact, the current electric car market says it has a promising future, but it is still on the edge of a relatively vague. After all, for now, conventional fuel cars still dominate the market, and electric cars still hold a lot of doubt in many people’s minds. But it was in the global electric car market’s downturn that Tesla bucked the trend.

Tesla’s new car registrations in China rose 14-fold last month, according to data. This has given the Model 3 manufacturer a huge boost as it prepares to deliver domestically produced cars from its Shanghai plant. Meanwhile, registrations for Tesla cars climbed to 5,597 in November, the highest level in five months, compared with 393 a year earlier. That’s one of the main reasons Tesla’s stock price hit a new high Thursday.

But the opportunity is also facing huge challenges. In China, new energy vehicle manufacturers also have a certain influence, such as BYD, Xiaopeng Automobile, Weilai and other new energy vehicle manufacturers. According to BYD’s official and data, its new energy vehicles sold 145,700 units in the first half of 2019, up 94.5% year-on-year. At the same time, market research institute J.D. Power released the 2019 China New Energy Vehicle Experience Research Report, the results show that the quality of Weilai cars surpassbmw, ranked first.

Although in the function of these domestic brands are currently or difficult to match Tesla, but in the national mood and better after-sales service, for The Tesla, such as outsiders still have a certain fighting force, in addition, the current research and development technology in new energy domestic new energy vehicles have been gradually upgraded and improved.

3, aggressive market-grabbing strategy Product quality exposed more and more problems

In November, a fire broke out at a charging station near ATesla’s Wawa convenience store in Passipani, N.J., CNBC reported. Tesla announced in August that it planned to increase the number of Tesla Super Charging Piles from 16 to more than 30 by the end of 2020.

Among them, we can get a glimpse of at least two hidden dangers. On the one hand, aggressive additions to the strategy, which have already caused accidents, are being questioned by the public and require innovative technology to accomplish. On the other hand, if fast-growing electric car sales do not guarantee adequate charging piles, it will also make customers unhappy and thus affect car sales. By any way, the company will be under no small pressure.

Moreover, more than 300 supercharging stations have now been built in the Chinese market, a speed that, while demonstrating Tesla’s usual style of play, the performance of the super-charging stations will also be met with public suspicion. What’s more, it’s no accident that Tesla’s product quality problems are now being exposed.

Take Tesla’s Autopilot system. According to Tencent.com, a car owner who bought the 2017 Model X 75D said it had serious faults, including a faulty Autopilot sensor, which caused the vehicle to stray several times from the road in order to avoid a non-existent object. Meanwhile, some owners say Autopilot’s autopilot feature does not distinguish between oil stains in the sun and lane markings.

Tesla’s aggressive marketing strategy has also created a corresponding dilemma, reflecting tesla’s desire to rush ahead of the industry and still face a technical challenge, and to achieve a technological breakthrough, it is difficult to avoid rising costs, but also to have a corresponding impact on its earnings.

Can Tesla, with a market capitalisation of more than $70 billion, hold on to the "third in the world"?

The broad development prospects of new energy vehicles give Tesla more room for imagination

Tesla predicts that electric cars will account for 25 percent of the U.S. auto market by 2024, well above the current 3 percent. In terms of China’s new energy vehicle sector, according to the “New Energy Vehicle Industry Development Plan (2021-2035)” published by the Ministry of Industry and Information Technology, by 2025, the proportion of new vehicle sales of new energy vehicles reached about 25%, intelligent net-connected car sales accounted for 30%. At the same time, the Chinese market accounts for about half of global sales of electric vehicles, making Tesla’s largest market after the United States. Taken together, the development prospects of new energy vehicles are a great opportunity for Tesla.

But it’s important to note that Tesla also expects its u.S. share to fall from 78 percent today to 40 percent by 2024 because of increased competition. Domestically, with the shanghai plant accelerating and putting into production ahead of schedule, and the widespread distribution of charging piles in China, this not only demonstrates Tesla’s strong momentum in China, but also demonstrates its determination to enter the Chinese market.

Moreover, Tesla’s batteries do have an advantage in the new energy sector. In an effort to improve self-driving memory, it has developed its own chips and has done well, with Tesla’s fully autonomous-driving chip named one of the 15 most iconic leading scientific and technological achievements at the 6th World Internet Congress on October 20, according to media reports. There is no doubt that Tesla will add a lot to the future competition, after all, the chip technology is difficult, high threshold, not everyone can do.

But at the same time, we want to see, for the technology add-on will certainly increase its research and development costs and operating costs, it is difficult to avoid the impact on its profitability. Moreover, independent research and development of chips can also be regarded as a double-edged sword, in the possession of more independent control technology rights at the same time, the stability of product quality still needs further verification of the market. After all, consumer trust cannot be used for experimentation.

In all, Tesla still needs to build more power to stay ahead of the new energy vehicle sector, as traditional car brands and new car-building forces compete. In the long run, it’s too early for Tesla to win on the new energy vehicle battleground, after all, the challenge is just beginning.

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