Major Investor Gives Bleak Outlook For Tesla

The days of Tesla (TSLA) dominating the auto market may be coming to an end, according to legendary investor Bruce Greenwald.

The former Columbia University professor assessed Tesla in an interview Wednesday with Yahoo Finance, saying that he believes the electric car giant will fail to dominate the sector due to the growing size of the EV market and the lack of differentiation between Tesla products and its competitors.

"Twenty years from now, you really think that they're going to dominate the auto market? Not a chance," Greenwald told Editor-in-Chief Andy Serwer.

“We know what a competitive auto market looks like. Because in that market, most of the big companies have flirted with bankruptcy at one time or another,” he said.

Greenwald noted that Tesla’s market share will decline as EVs become more popular with consumers over the coming years.

“If a market is small, like the electric car market is today, you probably need to get to 20% of that market to be viable,” Greenwald said. “In the mature automobile market that is global, you can be viable at 2%.”

Greenwald continued: “At the 20% requirement, Tesla may be able to keep rivals out. But at 2%, nobody's going to keep anybody down. And guess where the electric car market is going? It's going from 700,000 [vehicles sold] a year to 7 million a year.”

Between 2018 and 2019, Tesla’s market share increased from 11.8% to 16.2%, according to a study in July 2020 from McKinsey & Company.

Tesla is the most valuable carmaker in the world, rivaling the Big Three, as well as Toyota and Volkswagen. Tesla has a market cap of over $600 billion.

Electric carmaker Tesla said it boosted deliveries of its most affordable vehicle, the Model 3, as it delivered a surprise profit in the past quarter. Photo: AFP / JUNG Yeon-Je