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Tesla's Long-Term Prospects Remain Positive While Automakers Turn To Ventilators

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Tesla's Long-Term Prospects Remain Positive While Automakers Turn To Ventilators

Tesla, Inc. (NASDAQ: TSLA) had some big plans for 2020. The company wanted to deliver more than half a million new vehicles, but the coronavirus impact made them revise these expectations.

Initial expectations for 2020 deliveries for the Models S, X, and 3 ranged from 505,000 (Argus Research) to 517,000 (Citi Research). Now, those expectations have been lowered to 409,000 and 434,000 respectively, as a result of the shutdown of Tesla's two factories in Freemont, California and Buffalo, New York.

Just like Ford Motor Company's (NYSE: F) and General Motors Company (NYSE: GM), Tesla has also begun exploring ways to help fight the COVID-19 pandemic. All three major automakers have discussed producing medical ventilators, which are necessary for the successful treatment of acute cases of COVID-19. Officials are hoping that automakers can use their well-developed supply chains, as well as transferable expertise, to fill in for the shortfall of this vital medical equipment.

2020 results will definitely not be as expected for the whole economy, including the automakers. But when global economies eventually recover, whenever that is, Tesla is still in a good spot. Prior to this pandemic, many countries had been enacting laws to help combat climate change. Those enforcements might be further pushed by the European Union, which plans to make its own "ban" plan on gas-powered vehicles.

This will definitely help the electric vehicle makers recover from the COVID-19 impact as soon as the health situation allows it. China will also be critical to watch, as the country has already started stabilizing from the outbreak. They have their own ambitious plans when it comes to EVs, which should help these companies recover more quickly. 

We must also wait and see if the U.S. government will offer to help the renewables and EV segments, a courtesy it already offered to the oil industry.

 

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Photo by Andreas Dress on Unsplash

 

 

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