Competition Revs Up the EV Market

Competition Revs Up the EV Market

Tesla, Inc. (Nasdaq: TLSA) shares saw a decline earlier this week as traders finally bailed out of the high-flyer.

But not all players in the automotive industry are having as rough of a week. Ford Motor Co. (NYSE: F), up about 2.6% over the past five days, is clearly bucking the trend. While down only slightly over the same timeframe, General Motors Co. (NYSE: GM) has also outperformed the EV heavyweight.

The juxtaposition may not make sense at first. Tesla is the clear innovation leader in electric vehicles and self-driving software … and the Michiganders are trying desperately to catch up.

Laggards are clearly getting the benefit of doubt from investors. Get used to this for a while.

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Perspective is important. Even with the thumping taken by Tesla shareholders on Monday, the stock is still up in 2021, though not by much. But, to be fair, there is still much of the Tesla story yet to tell.

The Palo Alto, Calif.-based company is in the process of rolling out its next-generation Autopilot software. By every account, it’s impressive, bringing legitimate autonomous navigation to the current Tesla fleet.

By contrast, the self-steering software from General Motors seems like a toy. Automatic lane changing on highways and auto-braking are cool, but Autopilot can read street signs, creep into intersections and easily make left-hand turns against traffic.

In a strange way, Tesla is being penalized for being the first mover. In the relatively new era of EV production, it’s the legacy business with the slowest growth. Competitors are getting the “newcomer” star treatment … despite their tech lacking in comparison.

If that wasn’t ironic enough, GM and Ford won’t begin EV production in earnest until 2022. When this process starts, both firms are likely to create a tailwind of positive news events and heady growth metrics. It’s also reasonable to expect that demand is also going to be off the charts for all-electric F-150 pickups, Mustang SUVs and the new lineup of futuristic Cadillacs.


The closest analogy is the streaming-video-on-demand (SVOD) battle between Netflix, Inc. (Nasdaq: NFLX) and The Walt Disney Co. (NYSE: DIS).

Netflix is clearly better, in terms of both its library and digital execution. Disney got to the digital transformation of its entertainment business much later. The company didn’t make a significant investment until 2015 when it bought BAM Technology, a streaming tech business.

Yet five years later, Disney’s SVOD growth is spectacular.

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Managers announced last week that global SVOD membership reached 94.9 million subscribers.

Right now, investors would clearly rather own shares of the House of Mouse than slow-but-steady Netflix if they were looking for a growth SVOD pick.

But that doesn’t mean Netflix is going to take a backseat for long. Growth investors can see opportunity in newcomers to the digital transformation — like Disney — in the short term, but technology and innovation will win out in the long run.

I see the EV battle following a similar path.

Best wishes,

Jon D. Markman

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