Among every company in the world today, Tesla has always stood to be one of the greatest. Anyone would agree with this when they look at how good the company has kept generating revenue, the number of vehicles they’re selling and keeping the price of their products stable, which are all good traits of well-performing companies. Tesla is that company that has effectively transformed the automobile industry to the production of electric cars. Today, almost every company in the automobile industry is looking forward to transit to the production of electric vehicles.
Tesla has changed the world of automobiles to a better and improved state, which is what has gotten them to where they’re today. But right now, there’s something happening that might reflect on Tesla Stocks. What we want to discuss here is so important because you might not see a press release that talks about it. It’s something that will affect a larger portion of the population and change the game enormously for Tesla. Firstly, let’s talk about how Tesla Stock has been doing recently.
Tesla Stock Price
After the epic rise in Tesla stock, it is expected to remain unchanged for at least a year where it doesn’t record any notable difference within a year. This appears to be a wrong prediction when it keeps increasing without a stop. However, it later levels out. In Jan 2021, the TSLA stock price was $800, and it doesn’t make any difference today. It went up and down but still returned to the same price point.
This is common to many stocks, including the world’s best companies. When a stock experiences an epic rise, it’ll reach a point where it remains the same (chill-out period). This is the position of Tesla presently. The question now is about the possible performance of Tesla stock in the future. We can understand this better by looking at their competition.
The possibilities in terms of competition
What’s the first thing that comes to your mind when you hear the name, Tesla? It’s undoubtedly electric automobiles. Tesla is the Number one EV company; the first brand that comes to mind whenever you think of getting an electronic vehicle for yourself. Even if you don’t really know about Tesla and want to check out other brands, you’ll find out at the end of the day that Tesla is the grandmaster and basis for comparison of features to decide on which brand to go for. So your thought starts and ends with Tesla, and the same is the situation for most people. We go for the leading brand in any industry whenever we want to make a purchase.
One of the things that gave people think over Tesla cars is the price. Many ordinary people see it as a company with crazy expensive vehicles. But if we take a look at the current price of the two cars on mass sales from Tesla. We mean Model 3 and Model Y. The market price is forty-five thousand dollars and fifty-nine thousand dollars respectively.
Yet, the average price for new cars now is at the forty-seven thousand dollars mark, which means that Tesla’s mass sales models are now in line with the average sales point for new cars, with model 3 a little below the average and model Y a little above the average price point. This is a firm ground for Tesla to make more sales over the coming years. This is the condition in the lower end of Tesla cars.
If we move to the upper-end cars, we can analyse the Model X and its competition. Those that will consider buying model X will likely be people interested in cars like Range Rover and Escalades. By considering their gas mileage, Range Rover has a gas mileage of between 13 – 20, Escalades has a 14 – 20, while Mercedes have a 16 – 26 gas mileage. On the upper end, vehicles Tesla competes with have low gas mileage, which depicts a better advantage of sales also on the side of Tesla upper-end cars.
Lastly, let’s analyse the Cyber truck, which is the most popular Tesla product with endless hype and excitement around it. The competition for cyber trucks will be other big trucks on the market. Ford F series, for example, is one of the most popular trucks out there. It also has a gas mileage that is very low. This competitive merit of gas mileage is bringing in a game-changing moment for Tesla. Let’s check it out.
The Game-Changing Moment
Crude oil is currently experiencing a crazy increase in price, the likes of which has never happened since the 2008 price hike. This surely means that the cost of gas will keep going up. If crude oil price continues to rise for weeks or months, then there’s a chance that the gas price is not coming down anytime soon.
The drama between Ukraine and Russia is one of the factors responsible for the spike in price as sanctions on Russia also involves the blockage of crude oils coming from them. More and more people are demanding crude oil than ever before as everyone is getting back from the coronavirus lockdown and market breakdown. This can keep the price of oil up for longer than we can ever imagine.
The deal is that people are used to the average price point of gas that was between two to three dollars, which is a bottom reason why many may not need to consider an electric vehicle. But now that the price is going higher above $4 per gallon, there is probably going to be a change in perception.
Most of the people involved in the purchase of gas are those middle class that make the most of spending among the population using combustion vehicles. To them, the rise of gas beyond $4 is becoming overwhelming and frustrating, thus causing a great deal of concern. They’re thinking in their head whenever they’ve to pay such a huge amount to fuel their cars; this doesn’t come in my favour. Unluckily, most of their vehicles have low gas mileage, which means they’ll even be more distressed and concerned the more.
What effect would this have on Tesla?
If the continuous rise in the price of gas persists over a long period of time (which is likely to happen), the perception of everyone, especially the middle class, will move towards electric vehicles. Many people will begin to see lower-end Tesla cars like the Model 3 and Y as not too expensive compared to the amount they’ve to spend on fueling their car.
Most middle-class people who make the most significant portion of spending are now thinking of electric vehicles as more cost-effective than combustion vehicles and are now looking up to EV as their next car whenever that might be. Since we all know that the second name for an electric car for many people is Tesla, it’s a positive moment for Tesla stock. This shows the opportunity for more demand and sales for the company than ever before and a rise in their market cap.
Stock Investment is controlled by many things in the marketplace, with everything summing up to the effect of demand and supply. The condition the world finds itself in today raises the price of crude oil beyond what it used to be, which means that the cost of vehicles that use fuel will go beyond what most people can take and shift their attention towards a better option. The greatest option that will come to their mind is Tesla electric vehicles. This is going to raise the sales of Tesla cars more and eventually their revenue. The longer the crude rise goes, the more the demand for Tesla cars and the better the performance on the stock market.
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Recommended books for further reading:
- The Financial Times Guide to Investing:The Definitive Companion to Investment and the Financial Markets: The Definitive Companion to Investment and the Financial Markets
- A Beginner’s Guide to the Stock Market: Everything You Need to Start Making Money Today
- Investing QuickStart Guide: The Simplified Beginner’s Guide to Successfully Navigating the Stock Market, Growing Your Wealth & Creating a Secure Financial Future
- The Five Rules Successful Stock Investing: Morningstar’s Guide to Building Wealth and Winning in the Market
- Rich Dad’s Guide to Investing: What the Rich Invest in, That the Poor and the Middle Class Do Not!
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