Even Though Tesla Made Headlines In 2022, It Wasn’t The Top Auto Stock

(CTN News) – The most valuable Tesla stock this year wasn’t from an auto manufacturer. It was about which stock escaped the brunt of the year’s selling pressure.

The EV startup bubble burst in 2021, Tesla vehicle inventories are low, and interest rates are rising. In addition, there was concern about a recession and “demand destruction” in the industry.

Automakers did well financially this year, but not enough to offset outside economic concerns that their most profitable days may be over.

Morgan Stanley analyst Adam Jonas wrote in an investor note earlier this month, “We are preparing for a challenging FY23 Tesla outlook on demand decline (higher rates), deflation (lower price/mix) and unfavorable changes in the supply/demand balance for EVs.”

At Tuesday’s close, the FactSet Automotive Index, which includes automakers and aftermarket parts, was down 38%. All major automakers and EV startups saw double-digit declines in 2022 – partially or completely offsetting their gains in 2021.

There were a lot of once-promising EV startups that failed, as they ran into capital problems or couldn’t scale as quickly as they expected. So far this year, Rivian, Lucid, Canoo, and Nikola have all declined by 76% or more.

A lot of traditional automakers were able to temper their stock declines better than EV startups.

Both of America’s biggest automakers – General Motors and Ford Motor – saw declines of more than 40%, barring any surprise rally. Other companies like Stellantis, Nissan, Toyota, and Volkswagen are down more than 25%.

The Ferrari that loses the least wins

This year’s best-performing automaker Tesla stock is Ferrari, which is down 18% year to date.

How did that performance happen? It’s expected to sell roughly 13,000 of its jewel-like sports cars by year’s end, which is fewer than giants like General Motors produce in a day.

According to Tesla FactSet, those coveted cars sell for about $322,000 each.

The waiting list for a Ferrari is long even at those prices. It limits production to protect its exclusivity and pricing power, giving Ferrari exceptionally strong profit margins and ensuring that its factory won’t be idle for long.

In Ferrari’s third-quarter earnings call, CEO Benedetto Vigna said the company anticipates no problem with demand in 2023, regardless of the world’s economy.

There are valid reasons for Vigna’s view. There are several brand-new Ferraris coming out, including a sleek V12-powered four-door called the Purosangue that starts at about $400,000 in the U.S.

At that price, demand is brisk. Despite not shipping the Purosangue for a few months, Ferrari temporarily stopped taking orders last month after it sold out for the first two years.

BofA Securities analyst John Murphy said in a Dec. 13 note that Ferrari’s focus on quality and performance has led to a track record of resilient financial Tesla results, a significant intangible brand and luxury a luxury status.

A buy rating and $285 price target were reiterated by Murphy in the note.

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