Tesla’s shares stand strong heading into Q3, while NIO and Lucid’s shares dropped

As Tesla heads into the third quarter, following what Elon Musk called a “tough quarter” for the automaker, analysts are noting which electric vehicle shares are worth investing in. While Tesla’s shares jumped slightly in the last week of Q3, Chinese automaker NIO and fellow U.S. automaker Lucid both saw their shares drop. 

Tesla’s stock jumped by 2.6 percent nearing the end of last month, while automakers NIO and Lucid Motors saw shares drop by 3 percent and 4.7 percent, respectively, according to The Motley Fool. Mizuho analyst Vijay Rakesh cut stock targets on both Tesla and NIO on Monday, despite maintaining buy ratings on both stocks and adding that there’s still plenty of upside.

Rakesh said that a handful of factors, specifically including the COVID-19 shutdowns in China, played a role in his cutting of Tesla’s 12-month price target to $1,150 from $1,300. Additionally, Rakesh dropped his price target for NIO to $48 from $55 per share. Despite this, Rakesh noted that Tesla and NIO still have a lot of room for upside, though Lucid could be facing a value discrepancy between its startup status and other, more established automakers — such as NIO and Tesla.

Above: Tesla's shares jumped even after Credit Suisse dropped price target. Video: CNBC

Lucid’s market capitalization is currently about $30 billion, meaning the automaker’s shares are trading at over eight times its 2023 estimated revenue of $3.5 billion, while NIO’s shares are trading at just 2.5 times the company’s 2023 estimated revenue. Lucid’s flagship vehicle, the Air Dream Edition, retails starting at a price of around $170,000, which is much higher than Tesla’s premium luxury sedan, the Model S Plaid, retailing at a starting point of $125,090.

As ultra-expensive EVs become more and more limited, some analysts expect the automaker’s sales volume growth to flatten. Although Lucid currently has plans to debut more affordable models in the future, the near-term has seemed to captivate investor attention, while long-term investors may want to consider expectations at least a year or two years out.

With Tesla’s new Giga Berlin hiring several employees and substantially ramping up production, the automaker is considered well-poised to enter the next few years, even as supply chain, rising inflation costs and other barriers are resulting in an overall auto industry downturn. Increasing competition may also present some new challenges for Tesla, though its broad business model currently gives it an advantage over other automakers, including NIO.

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