Electric vehicle maker Tesla Inc. (NASDAQ:TSLA) recently reported quarterly deliveries just shy of 180,000 units, exceeding estimates from most analysts who have continued to increase these estimates in recent days. The company narrowly missed its target of 500,000 deliveries for the year, and has grown to a size that indicates this company is a potential player in the overall vehicle market.
The electric vehicle market is still tiny, accounting for only approximately 3% of the total market. This means Tesla’s numbers, while strong, need to be taken in the context of the entire industry. The company’s numbers are still tiny compared to its valuation, and significant caution should exist for investors thinking about Tesla’s stock price holding much "value" at all at these levels.
That said, a tremendous amount of growth is expected in the electric vehicle market, particularly in China. Rising sales in this segment are expected to increase the share of electric vehicles on the road to around 10% of the market by 2025. This sort of growth bodes well for sector leader Tesla, as the company’s growth targets continue to need to be elevated and investors expect more out of this growth play.
Whether or not Tesla will see its market share eroded by other automotive players with very deep pockets remains to be seen. For the time being, Tesla has a head start in this nascent area of the automotive industry, and investors are likely to continue to gravitate toward growth with interest rates being where they are.
Invest wisely, my friends.
