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Tesla Model Y. Image courtesy of Brendan Miles.


Should Investors “Buy the Dip” in Tesla, NIO, XPeng, & Other EV Stocks?

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Wall Street has faced major selloffs over the past few weeks, causing a continued downturn in the market. While the auto industry simultaneously faces major disruptions with the onslaught of new electric vehicles, even EV giant Tesla has been susceptible to the bear market — though, low share prices usually present an opportunity for skilled investors.

The overall stock market may be bearish, but the low price of EV stocks like Tesla and others has some investors considering if now might be the time to buy shares in EV companies, as noted by The Motley Fool. Beyond EV giant Tesla, auto startups such as Rivian and China-based NIO have seen their shares fall even harder — again presenting investors with the option to possibly buy shares at a cheap price.

Tesla is currently down about 40 percent from the stock’s high point, and high demand helped the automaker post an 87-percent quarterly revenue growth year over year in the first quarter. Despite this, Tesla’s production grew by just 69 percent, mirroring the fact that Tesla has increased its prices within the same time period.

The news comes as Tesla opens its Gigafactory Texas and Gigafactory Berlin, expected to help further increase production. However, the company has still been able to garner revenue growth at a greater rate than its production growth. This bodes well for investors, with Tesla’s control over its pricing model hardly dampening its skyrocketing demand.

Tesla’s EVs aren’t the only ones in high demand, however, as the market in general is in its infancy, with increasing competition in the auto sector. Rivian and NIO, for example, both saw losses in the first quarter, not unlike Tesla in its first handful of years, with the former automaker posting a revenue loss of $1.45 billion in Q1.

Image courtesy of NIO Inc.

The Motley Fool suggests that NIO and Tesla may be outright buy-worthy, but that Rivian’s manufacturing capabilities still require some time to prove their value. There’s no denying that Tesla has scaled production like no other EV company out there, and NIO’s production practices are already being lauded by investors, so both of these are no-brainer buys in the short term, at least as far as The Fool is concerned.

It’s worth noting that most of these automakers have business plans and goals set for the next five to ten years, and even Tesla took several years to become profitable. For investors, picking up these stocks while they’re super affordable could be a strong move — if they’re willing to hold out for the several years it takes for them to scale EV production and eventually become profitable.

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Tesla Sales in 2023, 2024, and 2030

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