Tesla's Expanding Lead in EVs

As Tesla (TSLA) pushes above and beyond $1,000, let’s remind readers why this tech stock is so brilliant and why it outperforms even amid a backdrop of haters that taint the stock on a daily basis.

No doubt that Tesla has benefited from the “re-open trade” with risk-on sentiment mesmerizing equity markets amid positive data points that reignited Tesla with vehicle sales in China.

Then there is the rampant speculation taking place buoyed by the Fed pouring trillions into the capital markets.

The outcome is tech stocks leading the way with many reaching all-time highs.

Specifically, for Tesla, a sanguine optimism is coalescing around the popularity of Teslas in China.

Tesla seems to have triumphed over the pandemic with a momentous “snapback” in demand for Model 3s in China.

Tesla delivered 11,000 Model 3 vehicles to Chinese customers in May, which is 7,000 more Teslas sold in China than April.

The telltale signs are there hinting this is the beginning of a voracious ramp-up in Tesla sales not only in China but throughout the Asian regions, including Southeast Asia.

The bumper sales seen in Tesla’s China numbers coincide with the building of their monster battery factory in Shanghai, coined Giga 3.

The news in China dovetails nicely with Tesla’s commitment to deliver more than half a million vehicles this year, which has raised some eyebrows on Wall Street.

One persisting issue remains – margins.

Musk has slashed prices on Models S, X, and 3, decreasing the marginal profit on these models ahead of the Model Y cannibalizing them.

Tesla’s bestselling car Model Y avoided a price cut.

Some of the premium add-ons have been upped in price to compensate price cuts such as Full Self Driving (FSD) increasing by $1,000 to penalize customers who desire more personalization.

An unfortunate headwind caused by the pandemic is that Tesla ended Q1 with bloated inventory because the supply chain was crippled by a delivery bottleneck and factory stoppages.

When Tesla drops prices, it harms legacy car companies far more because it raises the competition bar in EVs creating an environment where it will be awfully hard for legacy car companies to ever outdo Tesla with an inferior product.

For example, GM burns through $7,000 per Chevy Bolt sold at a time when the industry is forced to go all-electric as the pandemic effectively pulls forward EV demand to today.

Tesla’s headstart on the traditional car circuit is giving them ample time to turn the screws on them hoping a few of them drop like flies before they can ever get close to becoming competitive.

Eventually, gas guzzlers will be banned by governments and EVs will be universal.

Tesla is in a golden position to produce the optimal EV while tirelessly working to make them cost-effective for buyers in a lower income bracket.

I believe that Tesla will mix and match premium and basic models to cater to every price point so that every buyer will gravitate towards Tesla.

Musk keeps pushing the envelope with new divisions as well.

He continues his vision uninterrupted by proclaiming that the company's Nevada factory would likely produce the new semi-truck's battery and powertrain, with the remaining work done in other locations around the country. 

“It's time to go all out and bring the Tesla Semi to volume production," Musk said.

The semi-truck is planned to price at around $150,000 for the 300-mile model and around $180,000 for the longer 500-mile model.

This division could grow into a $3-5 billion revenue driver in the next few years.

This is yet another example of Musk staying one step ahead of the traditional carmakers.

To understand more about the Tesla semi-truck, click here.

Another project Musk is working on is the Blade Runner influenced cyber-truck.

The cyber-truck is a consumer truck that Musk is working on that he tested out with TV comedian Jay Leno.

To watch that clip, click here.

The future has never looked brighter for Musk and Tesla as the demand of the future has repurposed itself to today and only Musk can deliver on such high expectations.

Do not day trade this stock because the volatility will blow investors up. This is a buy and hold long term story.