You may not know it…
But there is a war going on for the soul of the American auto industry – and other than the traditional Big Three of Chrysler Fiat, Ford (F) and General Motors (GM) – there’s a new player in town that is bringing the fight to these established giants.
Tesla (TSLA) went from crazy idea to a credible and viable solution to the fossil-fuel crisis…
Even more, it has become a solid alternative to any of the cars that Ford, GM or Chrysler Fiat puts out.
However…
Who’s winning the war?
Which company is outpacing its competitors in growth and revenue?
Will the old school hold outs stave off the advance of Elon Musk’s company?
Or is it already too late for them to battle back?
The answer may surprise you…
As I said, there is a war being waged over the soul of the American auto industry – and there has yet to be a declared winner – but that all may change sooner rather than later.
I’m going to relieve you of some of the suspense now – this isn’t a 4-way race…
The race is between just TWO of these car companies – while the others will have to bide their time and hope their next innovation can get them back in the race.
So, for now…
Ford and Chrysler Fiat – are out.
However, that means that the TWO companies that are duking it out are none other than the company that Detroit built – and the company of the upstart internet billionaire.
Right now, GM and Tesla are at the head of the pack…
But let’s take a closer look at the two companies and what their quarterly earnings showed.
First up, General Motors says it delivered 446,997 vehicles in the US in the third quarter – which is a huge number – but still down 32% from a year ago.
GM management blamed the drop on the semiconductor supply shortage that is hitting ALL industries that depend on electronics – which is a believable excuse – as 2020 was HARD on this huge industry of tiny innovations.
That said, Tesla says it delivered 241,300 of their electric cars during the third quarter – a lot smaller than GM’s 446,997…
But that number represents a 73% increase from the year before.
Not that Tesla didn’t come into semiconductor problems of its own…
It’s just that it didn’t allow it to be slow them down as much as it did GM.
So, what do you see?
The general public sees a 73% increase in deliveries versus a 32% decline in deliveries – even though GM delivered almost TWICE the number of cars as Tesla – the fact of the matter is…
A decline is a decline… and investors reacted accordingly.
One Wall Street Analyst, Alexander Potter, said, “Tesla’s share of the battery electric vehicle (BEV) market will almost certainly fall — because many peers haven’t started selling BEVs yet. But we fully expect Tesla’s share of the overall market to continue rising, and we stress that declining BEV market share should not be considered a bearish signal.”
Interesting…
But that’s not the conclusion that was the most interesting…
Cathie Wood, founder, CEO and CIO of ARK Invest said, “Today, $TSLA announced that in the third quarter it sold 241,300 vehicles globally, up 73% year over year (YoY) and 20% quarter over quarter (QOQ). Meanwhile, $GM blamed the -33% YoY decline in its US sales on chip shortages. What? #EVs require 3-5x more chips per car produced!”
But that’s not really a fair comparison, is it?
Because If GM only had to produce 241,300 vehicles to see a 73% increase in deliveries – nobody would be talking about semiconductor shortages.
So, what have we learned from the war so far?
We learned that Tesla can beat forecasts and grow deliveries 73% year-over-year because it’s still a relatively small company in the automaker market.
We also learned that GM’s decline was basically ALL of Tesla’s entire quarterly production – which still makes them the leader.
It doesn’t take a Wall Street analyst to understand that big companies grow slower than small companies.
However, when big companies like GM finally put all their weight behind a business plan – they have so many more resources at hand that a battle isn’t even necessary…
Because if GM wanted to – it has the infrastructure and supply chains in place to overtake Tesla in EV sales.
What we can take away from this is that GM’s stock price most likely WON’T explode like Tesla…
It’s a steady grower – while Tesla is just now getting a good base under its wheels – so, while both stocks will make you money – Tesla might just grow a bit more simply because it’s a baby in the industry.
This is why GorillaTrades doesn’t trust analysts – we trust data.
Our recommendations come from numbers – not rumors or conjecture…
So, when you’re ready to take the guess work out of your trading – give us a try.
Until then, make your investment decisions how you always have. My question to you simple, though…
Which of these two would you put your money on?
“Quality means doing it right when no one is looking.” – Henry Ford