Tesla has reclaimed its place as the leading global EV maker, but is the stock worth buying?

Recent headlines suggest that Tesla (NASDAQ: TSLA) shares could be a good investment.

At one point the stock fell 30% from its December peak as it lost its global lead to a battery-powered electric vehicle (BEV) rival. BYD Company (OTC: BYDDY). Now he has regained that letter. However, there are always additional factors to consider. In fact, the deeper you dig, the less attractive Tesla stock becomes.

After several months of trailing BYD in total production of battery-only electric vehicles (or BEVs), Tesla has regained its position at the top. The iconic company delivered 358,023 EVs during the first quarter of this year, while BYD sold 310,389 battery-powered electric vehicles.

This appears to be a significant victory for current Tesla shareholders. But the victory is not the whole story.

Another important footnote to add here is that Tesla’s figure for the quarter fell short of analysts’ expectations of 365,645 vehicles. And BYD’s 310,389 were battery-powered automobiles. So that number doesn’t include the 378,604 increasingly popular hybrid vehicles it sold last quarter. Tesla does not manufacture hybrid vehicles.

Perhaps worse, Tesla is still losing overall market share here and abroad. And in Europe, it is losing share to BYD.

Now, losing share in the ever-growing EV market isn’t necessarily disastrous. However, this scenario presents a problem most investors are not accustomed to: Tesla’s declining pricing power due to new competition. The company has adjusted EBITDA. Margins have fallen steadily from a peak of nearly 24% in 2022 to less than 16% last year. Investors aren’t sure how to value Tesla shares under this new paradigm.

Then there is one more thing. The fact is that instead of finding a way to build more price-competitive (but higher-margin) cars and then create demand for them, Tesla CEO Elon Musk is ignoring this challenge and focusing on developing autonomous humanoid robots to handle household chores and other menial labour. Musk argues that these artificial intelligence (AI) androids will cost less than $30,000 and that they will begin commercial production sometime before the end of next year.

And maybe they will.

However, given Musk’s tendency to overpromise, underdeliver and overspend, shareholders have opportunity, reason and right to question the suggested timelines. The same is true for Tesla’s development of the so-called CyberCab, which should be priced similarly to the company’s planned robot, as well as being launched around the same time.

never say Never. Tesla could change the world with the successful launch of AI-powered robots and cost-effective self-driving robotaxi. The company’s electric vehicle business could continue to hold on to its market share, and even begin to expand its profit margins again.

But interested investors will need far more evidence that this could happen than just a positive quarter on the EV front. Other electric vehicle manufacturers are not going to go away that easily. In fact, they are going to be better, and become more competitive with Tesla as well as BYD.

This matters because BEVs are still Tesla’s bread-winning business. This situation is likely to remain the same for at least the next few years. In fact, this situation may continue for the next several years.

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James Brumley No positions in any of the stocks mentioned. The Motley Fool has positions in and recommends Tesla. The Motley Fool recommends BYD Company. The Motley Fool has one Disclosure Policy.

Tesla has reclaimed its place as the leading global EV maker, but is the stock worth buying? Originally published by The Motley Fool