Tesla Stock Scores Another Victory
The wins keep piling up for Tesla Inc (NASDAQ:TSLA). In a year largely marked by disappointment and frustration (both on and off the stock market), Tesla stock has been able to over deliver, if anything.
TSLA stock is up an astounding 435% year-to-date, and this is despite the economic uncertainty that has plagued 2020 as a result of the COVID-19 pandemic. But moving forward, it’s what Tesla stock has planned for the future that has me even more excited.
Take, for instance, the recent announcement that Walmart Inc (NYSE:WMT) is more than tripling its reservations of 18-wheeler Tesla “Semi” trucks in Canada in an effort to fulfill its green energy commitments. (Source: “Walmart Canada more than triples order of Tesla Semi Trucks,” Cision, September 29, 2020.)
A total of 130 Tesla Semi trucks are now reserved by Walmart Canada, one of the largest reservations of electric trucks in the country. This is part of the company’s larger plan to simultaneously generate growth in its operations in Canada while also aligning with Walmart’s global goals of hitting zero emissions by 2040, a goal announced earlier in September.
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“Tripling our reservation of Tesla Semi trucks is part of our ongoing effort to innovate the business and prioritize sustainability,” said John Bayliss, senior vice president, Logistics and Supply Chain, Walmart Canada. “By converting 20 per cent of our fleet to electric vehicles by the end of 2022 and committing to alternative power for all fleet vehicles by 2028, we are putting safety, innovation and sustainability at the forefront of our logistics network.” (Source: Ibid.)
And Tesla Inc isn’t just selling the trucks as electric vehicles; the company also claims that these trucks will be safer and “smarter” than the trucks of old.
“We are tremendously excited to equip our drivers with this next generation equipment. The safety and smart elements in the design are at the heart of our smart transportation ambition which will use technology(NYSEARCA:XLK) and data to lower our operating costs and improve safety for associates,” said Francis Lalonde, vice president, Transportation, Walmart Canada.
With a 500-km range on a single charge, these electric trucks are more than equal to the task of being able to fulfill Walmart Canada’s shipping needs. Moreover, this represents the second stage of Tesla stock’s growth plan: moving beyond consumer vehicles into the broader market of renewable tech.
While the company started—and achieved a great amount of success—with its consumer-facing vehicles, the true potential in TSLA stock has always been about how the company can play a major role not just in driving technology, but also in moving us towards a more sustainable society.
Things like solar(NYSEARCA:TAN) panel roofs and batteries that can power homes have been tantalizing investors, ensuring them that this company, even with its massive growth in recent years, still has so much more room to go.
Tesla Inc’s most recent exploration of this was its “Battery Day” wave of releases. While it didn’t quite live up to the lofty expectations that some had (myself included), it still delivered several impressive takeaways. We didn’t see any major advancements on the home battery front, but the other parts of Tesla Inc seem to be advancing at faster-than-expected rates.
For instance, in its lower-priced models, Tesla Inc is now introducing cobalt-free batteries. (Source: “Tesla cuts Model 3 price in China, improves range with cobalt-free LFP batteries,” electrek, October 1, 2020.)
This is an important development in and of itself, as it will help allay some concerns over cobalt mining. A huge portion of this mining takes place in the Democratic Republic of the Congo, where human rights abuse accusations like child slavery run rampant.
In fact, Tesla Inc was named in a lawsuit (alongside many other tech giants) for supporting these alleged abuses with the purchase of cobalt from these mining operations. (Source: “Apple and Google named in US lawsuit over Congolese child cobalt mining deaths,” The Guardian, December 16, 2019.)
Being able to produce batteries without cobalt would go a long way towards saving the lives of many people, even children. Not to mention that, by avoiding these unsavory mining operations, Tesla stock would score a dual win: avoid lawsuits and bad press.
While we’re still not quite at a place where cobalt will be totally excised from Tesla Inc production, it’s at least a start, and shows that there are some strides being made towards a cobalt-free battery.
Couple that with the company’s further claims that a new, cheaper, and more efficient battery is still in development, and you have one of the major reasons that Tesla stock is still so darn exciting: a thirst for innovation.
While many top tech stocks will rest on their laurels and become iterative rather than innovative, TSLA stock makes its money by doing the opposite. By constantly promising (and delivering) on ever-better renewable tech, Tesla stock has the ability to see years of growth like 2020 has been again and again. In fact, it has the chance to dominate the future technological landscape.
Competitors like Nikola Corporation (NASDAQ:NKLA) have tried to wrangle away some of Tesla Inc’s status and market share, and some have even been a little successful. But you can see by their diverging stock paths which company investors trust more (and for good reason as Nikola stock undergoes a bit of a stock scandal, but that’s a story for another time).
Chart courtesy of StockCharts.com
Overall, Tesla stock is looking to be the shepherd that ushers in a new renewable technology revolution. In fact, Tesla stock is arguably the best suited to play exactly that role…and it will continue to see gains as a top tech stock as a result.
It gets hard to remain bullish on a company that soars by 400%-plus in the span of a few months. The laws of diminishing returns (and the stock market more broadly) demand that, eventually, a fall must occur. But with TSLA stock, many keep expecting a fall…only to end up seeing the exact opposite take place.
Will there eventually be a correction in Tesla stock? 100%. You can’t soar this high this fast without accruing a good bit of concern from investors. The first major obstacle the company faces will likely induce a quick selloff period. But here’s the thing: long term, it’s hard to see what could derail TSLA stock’s growth trend.
Yes, there may be a slowdown or a downturn here and there, but in the coming years, it’s safe to say that few companies are as well positioned as Tesla Inc to benefit from the changeover to renewable tech. In fact, this company is arguably the top tech stock in 2020 precisely because it does what tech stocks do best: promise a better tomorrow, and work to create it.