You couldn't script a more shock and awe way to start 2022 than the fifth-largest U.S. company by market cap, Tesla (NASDAQ: TSLA), surging 14% on Monday thanks to record-high Q4 and full-year 2021 production numbers.
Let's compare how Tesla's production numbers stack up to legacy automakers like Ford (NYSE: F), General Motors (NYSE: GM), and Toyota Motor (NYSE: TM) and determine if Tesla is a good stock to buy now.
Image source: Getty Images.
Tesla is growing, but it's still a smaller player
The data isn't out yet for every automaker, but we do know that Ford delivered 1.73 million vehicles from January to November 2021, GM delivered 1.78 million vehicles in the U.S. alone in the first nine months of 2021, and Toyota delivered a staggering 7.99 million vehicles from January to October 2021. It's worth noting that Toyota, which has done a better job navigating the global chip shortage than GM, delivered 1.86 million vehicles in the U.S. in the first nine months of 2021 and is on track to dethrone GM as the largest automaker by sales in the U.S. for full-year 2021.
Tesla's record delivery numbers are incredible considering they represent an 87% increase from 2020. Tesla has yet to disclose its delivery numbers by region, but investors will be able to glean more information on Tesla's 2021 performance and deliveries during its next earnings call. Until then, it wouldn't be unreasonable to assume that Tesla could become the best-selling automaker in the U.S. within the next five years or so.
This optimistic attitude toward the future of Tesla is one of the main reasons why the electric car stock is worth nearly three times more than Ford, GM, and Toyota combined. Yet there's a good argument why buying a basket of stocks consisting of equal parts Ford, GM, and Toyota is a better strategy for investors than going all-in on Tesla.
Ford and GM are investing heavily in EVs. Recognizing the challenging battle they've been waging with European and Asian automakers, both companies see EVs as a way to generate growth from a less competitive playing field. A headstart combined with desired products could give both companies what they need to become relevant players in the EV market.
Ford plans to generate 40% of its 2030 revenue from EVs by building massive EV production facilities as well as its batteries in-house. On Tuesday, Ford announced it was doubling its F-150 Lightning electric pickup truck production to 150,000 vehicles per year in response to a reservation count that is quickly approaching 200,000. Ford had to stop taking reservations for the Lightning in December due to better-than-expected demand.
Image source: Ford Motor Company.
GM has announced it will launch 30 new EV models globally by 2025, generate $90 billion in annual EV revenue by 2030 and roughly $280 million in total revenue, and have an operating margin of 12% to 14% by 2030. GM recently began deliveries of its Hummer EV pickup truck and BrightDrop EV600 commercial vehicle and has plenty of highly anticipated announcements coming up in the months ahead.
Although Toyota announced a $13.6 billion plan to develop its own battery supply chain and produce EVs, it remains a truly entrenched yet dominant internal combustion engine-focused (ICE-focused) legacy automaker that is in a different category than Ford or GM. However, what Toyota does provide in a basket of EV stocks is a solid bet that the industry-leading ICE automaker will play a role in the transition toward EVs. Toyota is arguably the most efficient and diversified legacy automaker in the business and is a good value with a price to earnings (P/E) ratio of less than 20.
The tip of the iceberg
The EV industry seems like it's moving fast. But EVs only make up 3% of new car sales in the first half of 2021 in the U.S. and 13% in both Europe and China between January and October 2021. Battery electric and plug-in hybrids made up 7.2% of new car sales globally in the first half of 2021.
Investment by legacy automakers is just one of the many ways that show that Tesla and other pure-play EV companies like Lucid Group and Rivian Automotive are just the tip of the EV stock iceberg.
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Daniel Foelber has no position in any of the stocks mentioned. The Motley Fool owns and recommends Tesla. The Motley Fool has a disclosure policy.
The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.