Tesla ‘Is The Only Investable’ EV Play, Says Analyst, As Electric Vehicle Industry Navigates A Tough 2023: Year In Review

Electric vehicle stocks came under significant selling pressure in 2023 as conditions remained inclement for production as well demand. That said, shares of market leader Tesla, Inc. (NASDAQ:TSLA) rode on a strong first-half performance and doubled during the year.

Here are the key themes that dominated EV space during the year:

Tesla Goes Aggressive With Pricing: With the Fed continuing to take interest rate higher, Tesla smelled trouble and opted to go with the strategy of deep price cutting for most of the first-half of the year. The move produced a ”sugary high” for the stock, which rallied through the first half of the year. Demand, however, proved to be inelastic, not increasing by much.

However, these steep price reductions forced competing startups to a critical point where they had to choose between matching the cuts and exacerbating their already substantial losses, or maintaining their prices and risking a significant decline in revenue.

For Tesla, the price cuts turned out to be a margin-squeezing exercise. The company’s auto gross margin, excluding regulatory credits – aka core auto margin, continued to contract this year. From just under 25% in the fourth quarter of 2022, this metric slid to 16.3% in the third quarter of 2023. As a consequence, Tesla reported a double miss in the quarter.

Rivian’s Pushes Ahead From Startup Crowd: Other than Tesla, the only U.S. electric vehicle stock to end in the green was Rivian Automotive, Inc. (NYSE:RIVN).

Chart Courtesy Of Benzinga

When the rest of the startup ecosystem was cutting production amid difficulty in ramp-up and waning demand, Rivian maintained its production forecast for the year, in fact nudging it up slightly in the back-end of the year. The company now expects full-year production of 54,000 units.

The Irvine, California-based company also managed to keep costs in check, and in early November, it narrowed its full-year adjusted EBITDA loss guidance to $4 billion. Rivian ended the third quarter with $9.13 billion in cash, cash-equivalents and short-term investments.

See Also: Best Electric Vehicle Stocks

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