Why you should short Tesla, the electric-car maker running on empty

Electric-vehicle maker Tesla is absurdly pricey and faces stiff competition from rivals, says Matthew Partridge. Here’s how to play it.

VW electric cars
VW is one of many rivals gunning for Tesla
(Image credit: © RONNY HARTMANN/AFP via Getty Images)

Electric-vehicle manufacturer Tesla (Nasdaq: TSLA) has epitomised the boom in tech shares. Despite predictions from a range of pundits that the surging stock was about to slump, it has gone from strength to strength, while the group has started turning a profit. Each of my three recommendations that you short it, in March 2017, April 2018 and March 2019, has lost money. Even though Tesla’s shares have fallen after CEO Elon Musk’s foray into bitcoin, they have still risen 17-fold in two years.

Nevertheless, there are some solid reasons to think that the share-price surge may be overdone. Firstly, the enthusiasm for electric cars among governments around the world, with the UK announcing last November that it planned to ban the sale of petrol and diesel cars from 2030, is a double-edged sword for Elon Musk’s company. This is because the car industry is now pouring billions of dollars into its own models, with General Motors alone announcing at the start of this year that it is going to invest $27bn in electric-vehicle development.

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Dr Matthew Partridge
Shares editor, MoneyWeek

Matthew graduated from the University of Durham in 2004; he then gained an MSc, followed by a PhD at the London School of Economics.

He has previously written for a wide range of publications, including the Guardian and the Economist, and also helped to run a newsletter on terrorism. He has spent time at Lehman Brothers, Citigroup and the consultancy Lombard Street Research.

Matthew is the author of Superinvestors: Lessons from the greatest investors in history, published by Harriman House, which has been translated into several languages. His second book, Investing Explained: The Accessible Guide to Building an Investment Portfolio, is published by Kogan Page.

As senior writer, he writes the shares and politics & economics pages, as well as weekly Blowing It and Great Frauds in History columns He also writes a fortnightly reviews page and trading tips, as well as regular cover stories and multi-page investment focus features.

Follow Matthew on Twitter: @DrMatthewPartri