Since hitting an all-time high of around $900 at the beginning of the year, Tesla stock has dropped approximately 8% year-to-date.

Tesla Inc (NASDAQ: TSLA) stock is trading 0.72% down, around $639.60 in the pre-market session today. Down approximately 6% in the past five days according to market data provided by MarketWatch, Tesla stock is now under more pressure from Chinese electric vehicle company Xpeng Inc (NYSE: XPEV).

Notably, Xpeng has priced its new P5 sedan as low as 160,000 yuan ($24,694). To put the figure into a better perspective, the cheapest Tesla version, Model 3, has a base price of $39,990 according to metrics provided by Solarreviews.

Earlier this month, Tesla debuted a significantly cheaper version of its locally built Model Y sports utility vehicle in China. The cheaper Model Y was set to start at 276,000 yuan ($42,600) after government subsidies.

The notable difference puts Tesla stock under future strain. Moreover, the competition from other electric vehicle companies is growing both in Asia and Europe, their target markets.

Since hitting an all-time high of around $900 at the beginning of the year, Tesla stock has dropped approximately 8% year-to-date. Similarly, XPEV stock is down approximately 8% year-to-date according to MarketWatch. However, the latter has gained approximately 25% in the past three months, an indication of more investors.

Tesla Stock amid News from Xpeng

Tesla stock has been bolstered by a range of products already in the market. Additionally, the company has heavily invested in battery technology to help increase the mile range and reduce the overall price.

For long-term stock investors, Tesla stock remains a strong buy as the adoption is still in the early stages. Furthermore, the electric vehicle industry covers a small percent of the overall global vehicle shipments.

According to a study conducted by JPMorgan, EVs and HEVs will account for an estimated 30% of all vehicle sales by 2025. Tesla and its investors are betting big on global EV adoption. However, the stock market rally might not be as explosive as it has in the past due to several factors.

One, the company is valued at approximately $620 billion, which is technically harder to double than when the company was valued at less than $10 billion years ago.

Secondly, more electric companies are popping up while existing carmakers are preparing to shift to all-electric in a few years. Consequently, the competition is expected to heighten in the electric vehicle industry.

Notably, a study conducted by MarketWatch indicates Tesla stock has received a Hold rating from 39 analysts.

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Steve Muchoki

A financial analyst who sees positive income in both directions of the market (bulls & bears). Bitcoin is my crypto safe haven, free from government conspiracies.
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