In the EV boom, some traders like this Share CFD better than Tesla
2024/5/17
Tesla tends to dominate the headlines in the EV market, but Chinese EV brands could potentially seize the crown.
After Tesla’s bumpy Q3 2023 earnings report, traders and investors are starting to scout around for alternatives in the EV market to park their money. Tesla expanded their revenue by a mere 9% YoY, while earnings per share finished at an underwhelming $0.66 (-37%).
Meanwhile, China players like BYD, NIO and XPeng have all been racking up significant delivery growth during Q3.
With these big boys in the rearview mirror, Tesla will soon lose grip on the Chinese EV market if it continues to fall asleep behind the wheel, pun intended.
Picture: Graph shows some of Tesla’s key rivals in China’s EV market
It’s been quite a showdown in the electric vehicle world lately. When Tesla dramatically slashed prices to attract more customers, other EV automakers quickly followed suit, plunging into a full-fledged price war.
Just a while back, the cheapest version of Tesla’s Model Y SUV was sitting at nearly $20,000 above the average price of a new car in the US. But fast forward to April…that price gap vanished into thin air.
What does the EV price war mean for the world today?
The dawn of EVs, traditional automakers exposed
Cheaper EVs mean more options—maybe even more people making the switch from fossil fuels to electric. Legacy automakers like Ford and Volkswagen are now struggling to keep up with Tesla’s price cuts so they don’t get left behind. They’re seen ramping up their EV production in the catchup phase.
A battery price war kicks off, lowering manufacturing costs
The main cost of an EV is its battery. The steep price of energy-dense batteries has kept EVs pricier than their fossil fuel counterparts.
But here’s the kicker: China’s leading the pack when it comes to lithium iron phosphate (LFP) batteries. These batteries are cheaper, as they have no cobalt. With the growing demand for lithium, CATL has spent $1.4 billion to build lithium extraction plants in Bolivia, adding to a global rush to secure supplies of the battery material.
And that’s got consumers excited…it could mean more budget-friendly EVs are hitting the streets.
Mixed views on EV transition in the US Presidency
The effort to accelerate the US transition from gas powered automobile to EVs would largely depend on who’s the victor of the US election 2024.
Team Biden:
Biden’s strategy includes the boost of EVs with subsidies, new emission standards, infrastructure investments, and tax credits, calling it his big industrial and climate plan. He’s been touring assembly lines and battery plants, exploring the possibilities about creation of new jobs.
Team Trump:
Trump and his administration are painting a grim picture, especially in auto-centric Michigan, warning of job losses and touting EVs as too pricey, with infrastructure woes, and are not quite up to the same capabilities compared to their gas-powered peers.
Also: Are you obsessed with politics? Election years could be profitable for traders like you.
Why traders think Li Auto overtakes Tesla in the share market
Looking for an alternative to Tesla? Here’s one many are eyeing: Li Auto.
Despite some challenges when its Mega model tanked, Li Auto showcased impressive results when it released its August 2023 delivery update. The cumulative deliveries of vehicles in 2023 reached 208,165 as of the end of August, an increase of 663.8% Y/Y and 2.3% Q/Q, with monthly deliveries for each of the three Li L series models exceeding 10,000 vehicles.
And Li Auto was just warming up… the EV automaker exceeded expectations when it released its unaudited Q3 2023 financial results in November, surpassing forecasts with over 105,000 EV sales and a 271% increase in revenue. These financial highlights and growth plans bolstered investor confidence in Li’s market positioning.
The consistent robust performance makes Li Auto an appealing alternative to Tesla for anyone looking to put their money in this exciting industry. For those confident in Li Auto’s trajectory and seeking to capitalise on its growth, CFD trading with leverage can be a powerful tool to enhance investment returns.
That’s why VT Markets’ share trading offers competitive spreads and provides leverage of up to 20:1, allowing traders to amplify their market exposure.
Picture: Li Auto share prices on the rise as seen on VT Markets app.
Before you do, it’s worth looking to see where Tesla is heading and speculate the market. There are still reasons to remain bullish on Tesla. Recently, Elon Musk made a surprise visit to China with plans to expand Full Self-Driving Technology.
