Once an investor favorite to play the electric vehicle boom, Elon Musk’s Tesla has had a tough time of it of late. Just 15 months ago, Tesla joined the exclusive trillion-dollar market cap club . Now, a precipitous plunge in its share price in 2022 puts its value well under $400 billion. At the end of last week, the EV maker cut prices in the U.S. and throughout Europe in what’s being viewed as an effort to boost sales volumes. It sent the stock 1% lower on Friday and led a number of banks to downgrade their price targets on the company. Wells Fargo, for instance, reduced its target from $230 to $130 per share, and Citi cut its price target from $176 to $140 per share. The company’s shares have tumbled around 65% over the last year. There are a number of reasons for this, including a broad market sell-off in 2022. But there have also been some self-inflicted pains too: the long-running Twitter saga ; Musk’s massive sale of Tesla shares ; and a capacity expansion in the face of slowing demand. Tesla now finds a raft of competitors breathing down its neck, including Chinese firms with their cheaper offerings as well as traditional automakers making headway into EV production. Tesla alternatives For Deutsche Bank, Chinese EV maker Nio is the only pure-play name among its top automotive picks for 2023. “Our top pick remains Nio given its premium brand positioning and strong product cycle this year,” the bank said in an analyst note on Jan. 9. Nio’s management is now “laser focused” on execution and the company should see “much higher” volume growth in 2023, the bank added. Deutsche sees Nio’s product plans and brand reach as undervalued given the depressed value of the stock. Nio shares ended Friday at $11.81, down over 60% over the last year. Meanwhile, Warren Buffett-backed BYD and Li Auto are Jefferies ‘ top picks among the Chinese automakers. “BYD will be the clear price maker in the sweet spot mass market and a pioneer exporter in Europe in 2023. Li Auto is our favorite [new-energy vehicle] startup given its first-mover advantage in the hybrid market, precise product positioning, and operational efficiencies,” Jefferies’ analyst Johnson Wan wrote in a note on Jan. 10. The top EV pick for hedge fund manager David Neuhauser — who says Tesla has been “nothing short of a disaster” for investors — is a traditional automaker: he likes German automotive giant Volkswagen . “In terms of volume, I think Volkswagen is the one that could cause the most harm. While Tesla is financially in a good position, if it comes down to it, there are other companies out there like Volkswagen that could really beat them on margins because they have the balance sheet,” Neuhauser, founder and CIO of Livermore Partners, told CNBC Pro on Friday . Meanwhile, fund manager Steven Glass believes BMW looks “very, very attractive.” The managing director at Pella Funds Management told CNBC on Friday the company is likely to experience cyclical growth this year. It also has a “very well-managed” balance sheet and is trading at a price-to-earnings ratio of just 5.5 — a 20-year low. BMW has long made clear its intention to challenge Tesla’s leadership in EVs. It aims to have two million EVs on the roads by 2025 and estimates half of its car sales to comprise EVs by 2030. — CNBC’s Lora Kolodny and Michael Bloom contributed to reporting
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