Shares of electric vehicle giant Tesla have risen more than 70% this year, after falling 65% in 2022 in its largest-ever annual decline. Investors have flocked to the EV darling, with rising appetite for growth stocks and signs of a rebound in EV demand. But competition is getting stiffer and there’s the prospect of further price cuts . So is it time to buy the stock? Two investors faced off on CNBC’s ” Street Signs Asia ” on Wednesday. Bull vs. bear Ross Gerber, president and CEO of Gerber Kawasaki Wealth Management, is an unabashed Tesla bull. To him, Tesla is the undisputed “leader in the world globally” in sustainable transportation and energy. “When you look at a company whose full focus is advancing sustainable transportation and energy, Tesla’s technology is so far advanced, and I’m just talking the technology around EVs and not even talking full self-driving technology, but just the technology that they have built is so far advanced that their moat is so deep that they will be a leader for hopefully a decade or more to come,” he said. Gerber added that Tesla is already producing more EVs than any other automaker in the world, save for BYD . And it’s only “at the beginning” of a “massive shift” from oil-based infrastructure. Gerber is excited about the prospects for Tesla’s first pickup truck — the Cybertruck — which is expected to begin production by end-2023. He named “unrelenting pressure” on margins as one such downside, given the stiff competition in the EV industry. Tesla cannot be the EV leader without cutting prices, Bido added. “The exact reason why you need to be a bull is that the Cybertruck is coming. And the truck business is a massive opportunity not just for Tesla, but for Rivian , Ford and many others that are going to go into the truck business,” he said, calling the market “massive.” But Francisco Bido, senior portfolio manager of Integrated Alpha Group at F/m Investments, said now’s not the time to bet on Tesla. “We have a quantitative process at Integrated Alpha. And because of this process, it’s leading me to believe that Tesla is not really a good investment at this point. We look at our quant scores, and then we look at the story behind Tesla and we’re not that happy with it. We believe it has more downside than upside,” he said. Gerber, however, said he’s expecting margin growth later in the year. “I think the worst is happening now for margins, and I think margins will get better throughout time,” he added. Though the first quarter looks “questionable” to Gerber, he expects Tesla to see “massive” cost savings once its Gigafactory in Berlin reaches “profitable scale.” One of the most important components of an EV is the battery, and Gerber said Tesla is a leader in battery technology. Tesla works with Panasonic and Contemporary Amperex Technology to supply batteries for its vehicles, and also produces batteries through its massive Gigafactories — an advantage that competitors such as Ford and GM don’t have, Gerber said. But Bido is less bullish when it comes to Tesla’s leadership in battery EVs. “Toyota has the most and the highest number of patents for EV batteries,” he said. “They have it, not Tesla.” ‘Over-promising and under-delivering’ Tesla’s first-quarter vehicle deliveries may have fallen short of Wall Street’s expectations , but they represent an improvement from the previous quarter and were in line with the company’s own guidance. But according to Bido, it’s not enough that a company like Tesla merely meets expectations. “That’s simply not enough to get them forward. That’s not a strategy for the long term. That’s just getting a run in the short term, right? That doesn’t tell me anything about what they’re going to do next year,” he said. Bido said Tesla has to “get past this stage of over-promising and under-delivering,” citing the Cybertruck as an area in which the company has overpromised. “Promises are not good enough. You really have to deliver at some point.” He urged investors to “do their homework” and examine the competition. But Gerber, for his part, said Tesla is a buy, given that it’s fairly valued and is trading at “far” multiples for its potential and its long-term growth rate. “You have this wonderful opportunity to invest long term in an extremely unique company that is a leader in their industry and in many different segments of technology,” he said. “And because it’s an extremely volatile investment, they should dollar cost average into the company and they will be best-served in the long term.”
