Tesla in league of one as oil prices touch new highs. Here's why

Tesla is continuing to lead the world of electric vehicles (EVs) at a time when oil and gas prices have soared to giddy highs amid the Russia-Ukraine conflict. And while stocks of some major EV manufacturers, Tesla included, have nosedived, the Elon Musk-led company has still managed to fare better than most of its rivals, both in terms of how much share prices have come down and in terms of demand for products.

File photo: Tesla electric vehicles for test driving are parked in Hanam, South Korea. (REUTERS)
File photo: Tesla electric vehicles for test driving are parked in Hanam, South Korea.

While it is mostly obvious that climbing fuel prices would make EVs appear more attractive because of the comparatively lower cost of driving one, the current trend of fuel prices climbing have put the spotlight firmly on EVs. But not every EV manufacturer is able to deliver because the Russia-Ukraine conflict has also impacted supply processes.

But here is where Tesla is a bit different.

It isn't as if the global challenges in supply and manufacturing do not affect Tesla but it is the scale and intensity of that impact. Last week, the company's facility in Germany was approved while it was also confirmed that Japan's Panasonic Corp. plans to build a US factory to make lithium-ion batteries for Tesla.

Were these developments enough to arrest a 20% slide in Tesla share prices? No. Have these developments managed to keep investors interested still? Likely. “Tesla right now is the only EV company that has a demonstrable, viable business," Steve Sosnick, chief strategist at Interactive Brokers LLC told Bloomberg in an interview. “All the other ones are still concept stocks."

As for CEO Musk, he is calling for global oil output to increase because he admits current sustanaible solutions cannot match or replace Russian output. “Hate to say it, but we need to increase oil & gas output immediately. Extraordinary times demand extraordinary measures," Musk wrote on Twitter. “Obviously, this would negatively affect Tesla, but sustainable energy solutions simply cannot react instantaneously to make up for Russian oil & gas exports," he added. (Read full report here)

First Published Date: 07 Mar 2022, 08:54 AM IST
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