More Bad News for Tesla Stock: Ford and Toyota Are Thriving

Stock Market

Tesla (NASDAQ:TSLA) investors have had a miserable year. The stock is already down more than 20% in 2024. And it could get worse for Elon Musk before it gets better.

That’s because two of the electric vehicle maker’s biggest traditional automotive rivalsFord (NYSE:F) and Toyota Motor (NYSE:TM) just both reported phenomenal results, in large part due to the success of their hybrid offerings.

Ford, Toyota Head Up on Hybrids

Shares of Toyota briefly touched new all-time highs Tuesday after the Japanese auto giant reported strong earnings and lifted its outlook for 2024. The stock is now up more than 20% this year. Toyota noted that demand for hybrid vehicles, which have both gas-fueled internal combustion engines and electric-battery powered motors, surged nearly 38% in the first three quarters of its most recent fiscal year. The company added that sales of hybrid Toyota and Lexus models in China were steady and strong.

Ford posted strong earnings as well after the closing bell Tuesday, lifting its stock 2% Wednesday morning and pushing shares into positive territory for 2024 in the process. Ford CEO Jim Farley said in the earnings release that its Ford Blue gas and hybrid unit is booming, thanks largely to sales of its hybrid F-150 and Maverick trucks.

“We sold about 700,000 hybrids worldwide over the past three years and Ford is the only brand in the top three in both hybrids and EVs in the U.S.,” Farley said in the earnings release. “We’re expecting double-digit hybrid growth again in 2024.”

The healthy earnings from Ford and Toyota come just one week after General Motors (NYSE:GM) indicated that it was going to start selling some plug-in hybrids in the U.S. after discontinuing its Chevrolet Volt a few years ago in favor of all-electric cars.

GM CEO Mary Barra said on a conference call that the company “remains committed” to going fully electric by 2035 but conceded that it will be a challenge for both the company and consumers that still want gas-powered cars and trucks. “Deploying plug-in technology in strategic segments will deliver some of the environmental benefits of EVs as the nation continues to build its charging infrastructure,” she noted. GM shares are also outperforming Tesla so far this year, rising about 6%.

The Bottom Line

Tesla, meanwhile, has been struggling due to concerns about intense competition in the U.S. and China. Rivals are offering cheaper EV models, which has prompted Tesla to cut prices. That may be good news for consumers, but it’s not what Tesla investors want to hear. Analyst worries about the Cybertruck being a flop, coupled with continued concerns about how committed Musk is to Tesla after a Delaware judge voided his massive compensation package, could be weighing on the stock as well.

And the latest earnings from Ford and Toyota are just one more reason why legacy auto stocks are probably a better bet right now. The fact that other major car companies are finding success with their own EVs as well as hybrids is just one more headache that Tesla doesn’t need.

As of this writing, Paul R. La Monica did not hold (either directly or indirectly) any positions in the securities mentioned in this article. The opinions expressed in this article are those of the writer, subject to the InvestorPlace.com Publishing Guidelines.

Paul R. La Monica is a veteran financial journalist with nearly 30 years experience (including more than 20 at CNN) covering the stock market and other asset classes, the economy and other corporate and business news.

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