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Tesla Stock Faces a Tough Road Ahead as Auto Giants Enter the EV Race

There are few left who dispute that the future of transportation is electric. In just the past year, we’ve seen just how true that is, as climate experts and world leaders have stressed the importance of alternative energy solutions. Electric vehicle (EV) producers have responded with further innovations. As the leader of the EV race, Tesla (NASDAQ:TSLA) has enjoyed a comfortable lead over its competitors, primarily due to the fact that it was the first modern company to bring battery-powered solutions to the automotive sector. While newer companies built strictly to produce EVs haven’t been able to catch up with it yet, companies that previously dominated the industry are proving they aren’t content to stand by and watch Tesla dethrone them. As Tesla stock struggles to regain its early-year momentum, competitors are looking to catch up.

TSLA stock: Tesla Super Charging station on Stockdale Hwy and the 5 fwy. Tesla Supercharger stations allow Tesla cars to be fast-charged at the network within an hour.
Source: Sheila Fitzgerald / Shutterstock.com

What’s Happening With Tesla Stock

After racing into 2022 with a strong start following its record-setting Q4 deliveries, Tesla stock has spent most of this week slipping downward. It began this morning by falling. And despite reversing direction, it’s still down almost 3% for the day and 1.26% for the week, as of this writing. While it remains in the green for the month by 5%, that status won’t last unless the stock is able to quickly regain its upward mobility.

Elon Musk’s recent decision to establish a Tesla showroom in a region of China synonymous with genocide and violence toward a religious minority certainly hasn’t helped the stock’s losing streak. This is in part because it’s likely scared away some investors concerned with social responsibility. However, as investors evaluate Tesla stock, they should also consider the competition. Indeed, larger auto competitors are taking significant steps in the EV space. Let’s take a look at what’s happening in the industry.

The Road Ahead

Since Ford (NYSE:F) reported impressive numbers for the final quarter of 2021, speculation has risen as to what this may mean for Tesla stock. The longtime pillar of American automotive production has made it clear it intends to compete with Tesla. Furthermore, it has no intentions of slowing down in 2022 as it moves forward with plans for an electric pickup truck.

Naturally, other companies have been inspired by Ford’s example. Bloomberg reports that both Toyota (NYSE:TM) and Volkswagen (OTCMKTS:VWAGY) have laid out plans to invest $170 billion into EV production in the years to come. Indeed, Toyota has made it clear that its plans for growth are significant. They involve selling 3.5 million EVs in 2030 and marketing 30 different EV types. This may seem ambitious, but experts such as InvestorPlace contributor Alex Sirois see it as a growth stock for the decade.

This is a clear attempt to capitalize on the mass production that has helped these companies dominate the automotive field for decades. This won’t be without its difficulties, especially given the chip shortage experienced in 2021. However, both Ford and Tesla handled it well and still reported impressive sales figures for the year.

The Bottom Line

As to what these developments mean for Tesla stock, it’s difficult to say for sure. What we do know is that Elon Musk should be watching these companies closely as they continue their EV expansions. Companies such as Rivian (NASDAQ:RIVN) and Lucid Motors (NASDAQ:LCID) burst onto the scene with plenty of media coverage but still had to face the obstacle of establishing reputability in a crowded market. Conversely, names like Ford, Toyota and Volkswagen have been trusted by American car buyers for decades.

If they can find ways to effectively streamline EV production, it could certainly pose challenges for Tesla stock. 2022 will bring exciting changes to the EV race, and everyone should be watching.

On the date of publication, Samuel O’Brient did not have (either directly or indirectly) any positions in the securities mentioned in this article. The opinions expressed in this article are those of the writer, subject to the InvestorPlace.com Publishing Guidelines.


Article printed from InvestorPlace Media, https://investorplace.com/2022/01/tesla-stock-faces-a-tough-road-ahead-as-auto-giants-enter-the-ev-race/.

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