Tesla
stock is holding up in early trading, while shares of its U.S. electric-vehicle peers were in the tank. Pricing is the reason.
Shares were down 1% Thursday morning, while the
S&P 500
and
Nasdaq Composite
were up 1.6% and 2.4%, respectively.
The market is up thanks mainly to better-than-expected results from
Nvidia,
which is riding a wave of demand for semiconductors used for artificial intelligence. Its shares were up about 15% in early trading.
Better-than-expected isn’t the word investors will use to describe results posted Wednesday evening at
Rivian Automotive
and
Lucid Group.
Rivian management said they expect to make 57,000 vehicles in 2024, up from about 50,000 in 2023, while analysts surveyed by FactSet had expected 66,000. Lucid expects to make about 9,000 vehicles in 2024, up from the roughly 6,000 it sold in 2023 but far below the 12,000 Wall Street had expected.
Lucid stock was down 19% in morning trading, while Rivian shares fell almost 27%.
The weaker-than-expected results caught the attention of
Tesla
CEO Elon Musk. He said Wednesday night in response to a question on the social-media platform X that the “current trajectory has [Rivian] bankrupt in about six quarters. Maybe that trajectory will change, but so far it hasn’t.” He included a chart of Rivian’s falling cash balance.
Rivian isn’t profitable yet. It ended the year with almost $10 billion in cash and investments on its books. Management has said that is enough for the company to fund itself through 2025; the company didn’t immediately respond to a request for comment.
Gary Black, co-founder of the Future Fund Active ETF, which has invested in Tesla, said he was confused as to why Musk would be commenting on the competition at all. Rivian’s problems aren’t necessarily good for Tesla, he said, even if they could eventually remove a competitor.
“Further near-term demand or pricing pressures [could] limit Tesla upside,” he said.
Tesla didn’t immediately respond to a request for comment about the tweet.
Tesla, of course, is profitable and generates free cash flow. That is one reason its shares are riding out the effects of Rivian’s and Lucid’s results.
Another reason Tesla stock is outperforming its peers in Thursday trading boils down to pricing. The average price for a Lucid vehicle—taking sales and dividing by units sold—worked out to about $91,000 in the fourth quarter. The average price for a Rivian vehicle was $94,000, while Tesla’s average price for the fourth quarter was about $44,000. It is the only one of the three that makes relatively affordable EVs.
What is more, the market for high-end EVs is saturated in the U.S. All-battery EVs from luxury brands, including Tesla, accounted for some 40% of total U.S. luxury-vehicle sales this past year.
Battery-electric penetration of nonluxury cars amounted to roughly 2% of new car sales in 2023. Americans need cheaper EVs if electric cars are to make serious inroads in the market.
Shares of other Tesla peers were also moving.
NIO
shares were down 3.6% in early trading.
BYD
stock was flat in Hong Kong trading.
Ford Motor
stock was up 0.5%, and
General Motors
General Motors
stock was up 0.4%.
Tesla stock is well off its 52-week high of $299.29, set last summer.
Write to Rupert Steiner at [email protected] and Al Root at [email protected]
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