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Did Elon Musk build the best electric vehicle company on Wall Street?

Electric vehicles are quickly becoming the norm for automakers, with Tesla leading the pack in the booming industry. And while the company’s electric vehicles have made it what it is today, artificial intelligence and Elon Musk’s autonomous mobility plans could make it what it is tomorrow – which is why many investors consider Tesla the best EV stock to own.

Beyond Elon Musk’s leadership in the electric vehicle market, Tesla may also be worth betting on because of its exciting future, according to The Motley Fool. Tesla’s current operating margin is also more impressive than that of the rest of the auto industry, positioning the automaker well to capitalize on its position in the fast-growing electric vehicle sector.

According to the International Energy Agency, electric vehicle sales accounted for about 9% of all car sales in 2021, a figure that has more than tripled since 2019. A recent report by Grand View Research projects that sales of business will grow by approximately 38% per year. until 2027, due to expected reductions in production costs and improved battery life.

Tesla’s operating margin of 19.2% this year is up from the automaker’s operating margin of 14.7% in the fourth quarter of 2021. Compared to its close competitors, Tesla pays about 10% less on batteries, spending around 24% less than the industry average, as detailed in a Cairn ERA report.

Part of Tesla’s efficiency comes from its already highly automated factories, which has allowed the company to scale up vehicle production at facilities around the world. Over the past year, efficiency has also driven revenue growth, where Tesla saw revenue grow 73% year over year to $62.2 billion. Additionally, free cash flow has increased approximately 188% over the past year to approximately $6.9 billion.

Logistically, Tesla’s recent opening of Gigafactory Berlin-Brandenburg and Gigafactory Austin, Texas provides the automaker with another unique advantage. Tesla’s EV business can expect to launch the Cybertruck in 2023 and its next-generation 4680 batteries throughout this year, as it is currently looking to ramp up production of the Model Y at both factories.


Beyond the automotive business, Tesla CEO Elon Musk expects an autonomous robotaxi to hit the streets with volume production by 2024. Ark Invest, as an example of bullish on Tesla, expects the company’s robotaxi business to generate about $2 trillion in annual profits. by 2030, building on the automaker’s Full Self-Driving suite, which is already available.

The Tesla humanoid robot “Optimus” is also expected to bolster the company’s revenue.

In a statement on Tesla’s first-quarter earnings call, Musk said, “Optimus will ultimately be worth more than the auto business, more than FSD.”

Whether on future projects or on the valuation alone, Tesla remains an important action to watch. Tesla is currently worth more than the following 14 automakers combined at a price-to-sales ratio of 19 – more similar to the valuation of a software company rather than an automotive company.

Where some investors consider Tesla overvalued, others see potential for the automaker to continue to expand its dominant position in the electric vehicle race. It should be noted that Apple was considered overvalued before it released the iPhone, and some doubted Amazon before it reached its current valuation of $1.4 trillion.

Originally published on EVANNEX. By Zachary Viscont


 


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