Tesla ‘Is The Only Investable’ EV Play, Says Analyst, As Electric Vehicle Industry Navigates A Tough 2023: Year In Review – KraneShares Electric Vehicles and Future Mobility Index ETF (ARCA:KARS)

Electric vehicle (EV) stocks faced significant selling pressure in 2023 due to unfavorable production and demand conditions. However, Tesla, Inc. (TSLA) managed to ride on a strong first-half performance and saw its shares double during the year. Here are some key themes that dominated the EV space in 2023.

Tesla Goes Aggressive With Pricing: In response to increasing interest rates, Tesla opted for deep price cuts in the first half of the year. While this strategy led to a rally in the stock, demand did not increase significantly. The price cuts also put pressure on competing startups, forcing them to choose between matching the cuts and exacerbating their losses or maintaining their prices and risking a decline in revenue. The price cuts negatively impacted Tesla’s margins, with the company reporting a double miss in the third quarter.

Rivian Pushes Ahead From Startup Crowd: Rivian Automotive, Inc. (RIVN) was the only U.S. EV stock to end the year in the green. While other startups faced production challenges and waning demand, Rivian maintained its production forecast for the year and even increased it slightly. The company also managed to keep costs in check and narrowed its full-year adjusted EBITDA loss guidance. Rivian ended the third quarter with a significant amount of cash, further boosting its position.

Slowing EV Adoption: Despite regulatory mandates for transitioning to EVs, the industry faced a setback in 2023. Global EV adoption grew at a slower pace due to affordability issues and charging infrastructure bottlenecks. Analysts expect the industry to experience a further slowdown in 2024. However, there is optimism about future EV adoption, with expectations of increased familiarity with charging EVs and reduced range anxiety among consumers.

EV Companies Make Beeline To Tesla Charging: In an effort to address range anxiety, EV makers, both pure-play and legacy automakers, adopted Tesla’s North American Charging Standard. This move was seen as a win-win proposition for all parties involved. The number of adopters for the charging standard increased significantly during the year, potentially becoming a significant source of income for Tesla.

Legacy Automakers Trim EV Ambitions: Legacy automakers scaled back their EV plans due to the United Auto Workers’ strike and the slowdown in EV demand. Ford, for example, delayed its annual EV production target and reduced its production target for the all-electric F-150 Lightning pickup truck.

Looking ahead, Tesla is seen as the only investable EV company, according to fund manager Gary Black. He expects Tesla, BYD Company Limited (BYDDY, BYDDF), and Rivian to be the winners in the industry, while others may struggle. Black also predicts that Tesla will maintain EV prices unchanged in 2024 and sees the company well-positioned to capture the surge in EV adoption.

Overall, 2023 was a challenging year for EV stocks, but there is optimism about the future of the industry. EV adoption is expected to increase, and companies like Tesla and Rivian are well-positioned to capitalize on the growing demand.

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