Tesla Vs. Toyota: Which Car Manufacturer Is A Better Buy?

Cars Parked In Front Of Company Building

While the automotive industry in general was affected by the COVID-19 pandemic, the electric vehicle (EV) segment flourished. But now, as EV investors pull back on concerns over overvaluation and a semiconductor chip shortage, traditional vehicle manufactures are performing relatively better due to an expected decline in crude oil prices. We think Tesla (TSLA) and Toyota (TM), two established players in the auto manufacturing space, are poised to deliver whopping returns once short-term market volatility subsides. But let’s find out which of these two stocks is a better buy now.

Tesla, Inc. and Toyota Motor Corporation are two of the biggest car manufacturing giants in the automobile sector. TSLA not only designs, develops, manufactures and sells electric vehicles (EVs), it  also manufactures, installs and sells solar energy generation and energy storage products. Headquartered in Japan, TM operates through several business segments, including automobile, finance, house design and manufacturing.

Electrification, autonomous driving and shared mobility are the main trends that are expected to shape the automotive industry over the next decade. As the demand for cars increases—with people much more inclined now to commute and travel generally in personal vehicles for social distancing reasons—we expect established global car manufacturers TSLA and TM to witness greater demand for their vehicles.

While TM has returned 19.2% over the past year, TSLA has gained 322.9%. In terms of their past six-months’ performance, TSLA is a clear winner with 64.8% returns versus TM’s 16.1%. But which of these two stocks is a better pick now? Let’s find out.

Latest Movement

On April 27,  TSLA announced that it intended to tweak its application for its planned Gigafactory in Europe, but that it could not give a definite date when the site would be approved. If its plan comes to fruition, it expects to increase its production capacity by five million vehicles annually and increase its revenue significantly.

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