Tesla (NASDAQ: TSLA) has long been the ultimate Marmite stock. Whether you loved or hated it, though, you often couldn’t ignore it.
But the polarisation has now spread to the brand itself and CEO Elon Musk specifically. Even long-time Tesla bulls are worried. For example, Dan Ives, managing director at Wedbush Securities, says the electric vehicle (EV) maker is facing a “brand tornado crisis moment”.
The Tesla share price is down 50% in three months. But investors who bought previous dips like this have been rewarded handsomely.
Despite the drop, the stock is still up 728% from a Covid-crash low five years ago.
Let’s ask the bot
But I’m torn on whether this situation is different. I suspect it might be, but writing Tesla off in the past has been a mistake.
For a little assistance then, I turned to artificial intelligence (AI) in the form of ChatGPT Plus. I asked it if the share price is doomed, or if this is a potential dip-buying opportunity for my portfolio.
Here’s what it said.
No joke
The chatbot immediately put my fears at ease, saying the stock is not “necessarily doomed“. But Tesla is facing a drop in deliveries amid weakening demand.
The bot also asserted that competition is “no joke“, highlighting EV rivals like Rivian, Nio, and BYD. I don’t see Nio or Rivian as real threats, but BYD certainly is. The Chinese firm has ultra-low production costs and is selling quality EVs for $10,000 in China, where it also dominates with plug-in hybrids.
BYD will soon be selling its popular Seagull EV in the UK — renamed Dolphin Surf — and will reportedly cost less than £20,000. It already has other EV models out in the UK and is exporting aggressively to Europe, Southeast Asia, and Latin America.
Recently, BYD announced its Super e-Platform, a charging technology that it says can add around 250 miles of range in just five minutes. Musk warned about innovative Chinese competition last year.
If there are no trade barriers established, [Chinese car companies] will pretty much demolish most other car companies in the world. They’re extremely good.
Elon Musk.
Elon factor
My artificial assistant also pointed out that Musk is a “wildcard” that adds volatility risk. That’s true alright. The unorthodox persona was once an asset, but might now be a liability.
As has been widely reported, some Tesla vehicles, charging locations, and showrooms have been attacked in the US. However, I recently parked near a row of Teslas at a UK Supercharger site and nothing was ablaze. I’ve seen none daubed in graffiti.
It’s hard to know yet the true scale of any brand damage. We’ll find out more in early April when Tesla announces Q1 vehicle deliveries.
My decision
ChatGPT reminded me that Tesla is about more than just EVs. There is energy storage today and possibly robotics and vehicle autonomy tomorrow. If just one of those bets pays off, the bot declared, today’s price could look like a bargain. Indeed.
As for valuation, it said the stock is “still pricey relative to legacy automakers“. That’s an understatement — the price-to-earnings ratio is currently above 100!
Weighing things up (myself), there is too much uncertainty here for me to invest.
