Tesla: A Brief Company Analysis
The Tech in Tesla’s Market
Tesla is making giant strides in the self-driving car industry; creating a lot of AI enabled software, designed to collect information about driving. They also implement ‘over-the-air’ updates for their cars just like a phone company. Thus, Tesla can be categorised as being part of the ‘Automotive-tech’ or ‘Connected car’ industry. As an Automotive-tech company Tesla need to ensure they abide by the EU’s GDPR rules for any data collected within the EU. This would also apply to data collected in the UK during the transition period. The transition period ends on the 31st of December 2020 and until then all EU laws will be supreme in the UK.
According to research by IHS Automotive the number of self-driving/autonomous cars on the world’s roads is expected to grow to 21 million by 2035. They also estimate that cars connected to the internet have grown six-fold since 2013. This will mean that in the future some of the legal issues that market players will need to consider include new regulations for connected cars, M&A happening between the tech and automotive industry, IP litigation and even cyber security and the handling of data.
What does this mean for its stock price?
Connected cars represent the convergence of the automotive industry with a wave of digital developments; in which Tesla is currently playing a large role. Subsequently Tesla’s stock price has been steadily rising this year. However more recently on the 12th of June the stock price fell down after crossing $1000 for the first time. This decline in the value came after analysts from Morgan Stanley and Goldman Sachs lowered their rating of the Tesla stock by saying it was overpriced. This shares similarities to the incident earlier in the year when Elon Musk himself tweeted “Tesla stock price too high imo” - at the time those 6 words managed to wipe $14 billion off the company’s value. Having said that, it is likely that Tesla may play a large role in the growth of the automotive-tech industry and its stock price may rise even higher than before.
By Jai Anilkumar