Tesla (NASDAQ:TSLA | TSLA Price Prediction) is the latest EV maker to run over a bit of a roadbump this earnings season. Indeed, the immediate reaction to the second-quarter sales slowdown was overwhelmingly negative. The stock tanked by just over 9% before recovering much of the ground in the following trading session.
Indeed, it’s going to take some time to digest what the EV slowdown really means for the fate of the ailing Mag Seven stock. With a robotaxi opportunity up ahead, perhaps shareholders should be quick to forgive Elon Musk’s EV titan for another fumble. In any case, the EV scene is a tougher place to make a quick gain these days. Still, the case for owning them as a value play is making more sense with every dip lower.
At the end of the day, even industry-wide pressures can be overcome by the top players in the space that can take enough market share away from rivals to offset the headwinds. Indeed, competitive pressures are mounting in the EV space, and it’s not yet clear which firm will walk away with its hand raised over the next 18 months, as new models and innovations dictate which EVs prospective buyers will go for.
In any case, let’s weigh in on two EV titans, Tesla and its Chinese rival Nio (NASDAQ:NIO), to see which name offers more value at current levels.
Tesla
Tesla is driving through a “rough” patch right now. While a cautious guide may be a red flag to sell the stock before the Mag Seven laggard has a chance to make a return to multi-year depths, I do think that the Q2 revenue drop isn’t necessarily a sign that it’s lights out on growth. At the end of the day, Tesla is already poised to make a big splash in the early days of the robotics revolution with Optimus.
Add the Cybercab catalyst into the equation, and perhaps EV sales declines in the last quarter are the least remarkable part of the Tesla story. As the economy itself roads into a bit of headwinds at the hands of high rates and tariff pressures, perhaps a lower-cost model is exactly what the EV titan needs to nudge sales in the right direction. Indeed, the cheaper Model Y could be the catalyst Tesla needs to reverse course.
With a second-half launch in the cards, I view the Model Y as a timely catalyst to look forward to. The big question is whether the stripped-down model will be enough for buyers to feel like they’ve gotten a decent value. It’s tough to say. Either way, robotaxi remains one of the top reasons to stick with Tesla. Perhaps there’s a reason Ark Invest’s Cathie Wood is buying the dip in the out-of-favor EV play.
Nio
As Tesla backtracked this past month, Nio has been moving forward, with a nice 44% gain following hype surrounding new models on the horizon. Indeed, Nio’s more affordable sub-brands may better resonate with consumers who are looking away from luxury for something with a more enticing value proposition.
Add the battery-as-a-service (BaaS) model into the equation (battery swapping is quite an intriguing and convenient way to go), and I do view Nio as a battered EV play with enough catalysts to come climbing back after years of pain. The stock is still down over 91% from its 2021 bubble peak, but fortunately, the firm may have enough timely catalysts to get rolling higher again.
It’ll be interesting to see if recent delivery strength carries over into the coming quarters. As relatively small fish compared to Tesla, there’s a lot of growth to be had if the firm can garner significant demand for new models as management does its best to expand its horizons beyond China. Additionally, perhaps there’s room to trim away at costs to get margins back on the right track. In any case, I think Nio has plenty of options as it looks to recover much of the ground it had lost since 2021.
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