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Electric vehicle industry bulls such as ARK Invest’s Cathie Wood and Wedbush Securities’ Dan Ives were out with reminders this week that the death of the EV transformation and Tesla (NASDAQ:TSLA) story has been scripted many times before. The defenses came with some bearish analysts taking a victory lap over the sluggish share price this year and underwhelming outlook given by the company alongside its Q4 earnings report.
“Tesla is going through a low right now related to the cycle,” stated Wood on CNBC. “But when autonomous taxi networks, platforms kick in, as we think they will within the next two years… then what we’re talking about with Tesla is a reacceleration in growth and a huge increase in margins,” she added.
Meanwhile, Ives has faulted Elon Musk a few times over the last few weeks, but thinks the skeptics have it wrong that electric vehicles are a fad. “We could not disagree more with the ultra negative Tesla narrative building and forming a black cloud over the stock,” he wrote. “While the next few months are clearly a bit cloudy for the Tesla story and overall EV demand, longer term our view is that by the end of the decade ~20% of autos will be EV with autonomous and FSD a reality and not a dream/aspiration,” he predicted. Key questions in the near term for TSLA investors include the outlook for margins after price cuts in several markets and what lever the Tesla (TSLA) board pulls to restore investor confidence amid the uncertainty if Elon Musk will do something drastic with the AI business if he does not get 25% voting control.
Ives unleashed: “The stock is baking in a tremendous amount of bad news here in our view and the onus is now on the Board to outline a strategy that investors can view as the foundation for Tesla’s future with Musk the hearts and lungs of this vision. We believe the uncertainty around Musk at Tesla and overall AI initiatives has been a $40-$50 per share overhang on the stock that must be addressed by the Board.”
Wall Street in general is cautious on Tesla (TSLA) with 16 Buy-equivalent ratings stacking up against 22 Hold-equivalent ratings and 7 Sell-equivalent ratings. Analysts can’t even agree on the impact of Tesla (TSLA) introducing a mass-market sub-$30K vehicle (transformational vs. negative Osbourne effect). Amid the debate, the average price target from sell-side analysts on TSLA only implies a 10.5% share price gain over the next year. 
Tesla (TSLA) is down roughly 22% on a year-to-date basis and trades below where it stood both one year ago and two years ago. However, the monster rally of 2020-2022 is still embedded in the Tesla (TSLA) market cap of $614B and the company is the 12th most valuable in the U.S. based on market cap. The next three pure-play electric vehicle stocks on the market cap list are BYD company (OTCPK:BYDDF) at $71.6B, Li Auto (LI) at $25.3B and Rivian Automotive (RIVN) at $16.0B.
