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Did Elon Musk build the best electric vehicle company on Wall Street?

Did Elon Musk build the best electric vehicle company on Wall Street?

Electric vehicles are quickly becoming the norm for automakers, with Tesla leading the way in the fast-growing industry. And while the company’s electric vehicles have made it what it is today, Elon Musk’s plans for artificial intelligence and autonomous mobility could make it what it is tomorrow.

In addition to Elon Musk’s leadership in the EV market, Tesla may also be worth checking out for its exciting future, according to The furry fool† Tesla’s current operating margin is also more impressive than the rest of the auto industry, which positions the automaker well to leverage its position in the burgeoning EV sector.

According to the International Energy Agency, electric vehicle sales accounted for about 9 percent of all car sales in 2021, a figure that has more than tripled since 2019. A recent report from Grand View Research expects the company’s sales to grow at about 38 percent a year through 2027, due to projected declines in manufacturing costs and improved battery ranges.

Tesla’s operating margin of 19.2% this year is higher than the automaker’s operating margin of 14.7% in the fourth quarter of 2021. Compared to closest competitors, Tesla pays about 10% less on battery packs, spending about 24% less than the industry average, as detailed. in a report by Cairn ERA.

Part of Tesla’s efficiency comes from its already highly automated factories, which have allowed the company to increase vehicle production in facilities around the world. Over the past year, efficiency has also led to higher revenues, with Tesla seeing revenue rise 73% to $62.2 billion in the past year. In addition, free cash flow has increased by about 188% in the past year to about $6.9 billion.

Logistically speaking, Tesla’s recent opening of both Gigafactory Berlin-Brandenburg and Gigafactory Austin, Texas offer the automaker another unique advantage. Tesla’s EV business can look forward to launching the Cybertruck in 2023 and the next-generation 4680 batteries during this year as it currently plans to ramp up Model Y production at both plants.


In addition to the auto industry, Tesla CEO Elon Musk expects an autonomous robotic axi to hit the streets with volume production by 2024. Ark Invest, as an example of a company optimistic about Tesla, expects the company’s robotic axi business to generate approximately $2 trillion in annual profits by 2030, piggybacking on the automaker’s Full Self-Driving suite, which is already available.

The Tesla humanoid robot “Optimus” is also expected to boost the company’s revenues.

In a statement during Tesla’s Q1 earnings call, Musk said, “Optimus will ultimately be worth more than the auto industry, worth more than FSD.”

Whether in future efforts or just valuation, Tesla remains an important stock to keep an eye on. Tesla is currently worth more than the next 14 automakers combined with a price-to-sale ratio of 19 — more comparable to a software company’s valuation than a car company’s valuation.

While some investors think Tesla is overvalued, others see the potential for the automaker to expand its dominance in the EV race. It’s worth noting that Apple was considered overvalued before the iPhone was released, and some doubted Amazon before it reached its current value of $1.4 trillion.

Originally posted on EVANEX† By Zachary Viscont


 


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