The Zacks Analyst Blog Highlights Tesla, Volkswagen, General Motors and Nissan
For Immediate Release
Chicago, IL – March 23, 2023 – Zacks.com announces the list of stocks featured in the Analyst Blog. Every day the Zacks Equity Research analysts discuss the latest news and events impacting stocks and the financial markets. Stocks recently featured in the blog include: Tesla TSLA, Volkswagen VWAGY, General Motors GM and Nissan NSANY.
Here are highlights from Wednesday’s Analyst Blog:
The Race for Affordable EVs Is On: Here's How the Competition Looks
Remember the bold promise made by Tesla's CEO, Elon Musk, at the company's Battery Day in 2020? He assured to launch a low-cost $25,000 electric vehicle (EV) in about three years. We are in 2023 and Tesla is not ready with its super cheap electric car as promised. In fact, it is unclear whether the company is still aiming for a $25,000 EV.
But it seems that an EV worth around $25,000 may make its way to the market a few years from now, just that it is probably not going to be a Tesla. Germany-based auto giant Volkswagen recently revealed the ID.2all battery-powered hatchback that is likely to be priced at 25,000 euros ($26,600) or less. Meanwhile, auto majors like General Motors and Nissan already have EV models priced below $30,000. By comparison, Tesla's entry-level Model 3 sedan costs around $43,000.
Tesla Misses on Its Goal of Delivering $25K EV
In 2020, Musk had announced plans to bring a $25,000 fully electric car to the market within three years. Tesla fans and industry watchers were keeping their fingers crossed for the compelling low-cost EV, which was also promised to be fully autonomous.
However, in early 2022, much to the fans' dismay, Musk quashed the idea by saying, "We're not currently working on the $25,000 car. At some point we will. We have enough on our plate right now. Too much on our plate, frankly." Musk said that his company was too occupied with other projects, including the Optimus bot and the production ramp-up of Model Y.
Then again, during the third-quarter 2022 earnings call, Musk indicated that the low-cost EV was back in the cards and the company was deploying engineering capabilities to build the next-generation EV platform to make more affordable green cars.
Investors had been expecting the EV powerhouse to shed light on the same at its first-ever Investor Day early this month. But that did not happen. While Musk did tease a next-gen vehicle and said it would be cheaper than its Model 3, he did not disclose its price and features. He did not even reveal when the vehicle would go into production. All he mentioned was that the model would be built at a new plant in Mexico.
How affordable the new vehicle would be and when it would go on sale is still unclear.Well, here's one thing. Tesla has a history of over-promising and under-delivering at times. Notably, 2019 was arguably the first year the company finally met its lofty goals. Tesla surprised investors by hitting delivery targets that year and also made good on its promise related to the Shanghai Gigafactory progress.
Indeed, Tesla has come a long way since then and has started delivering on most of its ambitious targets. But Musk's dream of launching affordable vehicles hasn't come to fruition yet. Before Model 3 rolled out in 2017, Musk said that it would cost just around $35,000 but few were sold at that price. Model 3 prices have, in fact, only steadily increased since then before eventually the company slashed prices in January 2023.
As Tesla has shared little details about its next-gen vehicle at its Investor Day, it remains to be seen how inexpensive the car would be and when it would hit the market.
Volkswagen Beats Tesla, Reveals €25K EV
While Musk hasn't realized his dream of developing a super cheap EV yet, it seems Volkswagen might bring that dream to reality sooner than Tesla with its D. 2ALL — a fully electric compact hatchback. The vehicle will boast a range of 280 miles and a 23-horsepower electric motor.
The vehicle has an exciting low price point of just €25,000 or less (approximately $26,500) and is expected to hit the Europe markets in 2025. The ID.2all will be the first of 10 new battery-powered models VWAGY targets to launch by 2026. This is in line with the company's aggressive EV push. The company is dreaming big in the EV space and aims to take the lead over Tesla by 2025.
Cheaper EVs Are Key to Mass Adoption
EV sales in the United States shot up 65% in 2022. EVs accounted for 5.8% of all new cars sold in the country, marking an increase from a 3.1% share in 2021. While Tesla has immensely popularized green cars, delivering more than 1.3 million worldwide in 2022, it has an average selling price (ASP) of more than $65,000, which may not be affordable for sub-prime consumers.
According to a Deloitte study earlier this year, 70% of US consumers don't wish to spend more than $50,000 to purchase an EV. Per the study, high prices for EVs are a major hurdle to their mass adoption.
For a much wider adoption of green cars, which is the need of the hour, the ASP of an EV has to go down. Per Kelly Blue Book, the average new EV was sold for $58,385 in February. At this price point, EVs may get out of reach for many consumers. Automakers should gear up to bring electric mobility to the masses by developing more mainstream models at low price points. As of now, choices haven't been aplenty for consumers.
But a few companies are producing low-priced EVs at sub $30,000 price levels. US legacy automaker General Motors' hot-selling EV in the US market — Bolt — is priced below $30,000. The Chevrolet Bolt EV and EUV start at around $26,500 and $27,800, respectively. The company is also introducing an electric version of its Chevrolet Equinox this year, starting at $30,000.
Japan's auto giant Nissan's Nissan Leaf is one of the most affordable EVs in the market, with a starting price of around $27,800. EV startup Fisker, which is set to commence deliveries of its much-anticipated electric Ocean SUVs soon, offered a glimpse of its Pear EV early this month. Its base price is expected at $29,900 and deliveries are scheduled to begin next year.
While GM and VWAGY carry a Zacks Rank #2 (Buy), NSANY and TSLA have a Zacks Rank #3 (Hold). You can see the complete list of today's Zacks #1 Rank (Strong Buy) stocks here.
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