Tesla is still miles ahead of the competition, this portfolio manager says

Competition may be heating up in the electric car space but Tesla (Tesla News, Stock Quote, Chart NASDAQ:TSLA) is still the front runner when it comes to technology and driver experience, says Paul Harris, portfolio manager at Harris Douglas Asset Management, who nonetheless argues that the company would do a lot better without Elon Musk at the helm.

“If you own a Tesla or have driven the car, it’s an incredible experience. I think they’re miles ahead of other car companies with the exception of BMW in coming out with great-looking electric cars,” said Harris to BNN Bloomberg on Tuesday.

“The trouble with the story is that it’s a very cap-intensive business and there’s a lot of cash burn. It’s very hard to grow this business. The volume that [Musk] needs is quite substantial but he kind of always misses them. He puts out big, huge numbers and then misses them and the market at some point gets tired of that,” he says.

Tesla’s share price rose on Wednesday as investors reacted to the company’s latest quarterly production numbers which showed a 51-per-cent increase in cars delivered over the three months ended June 30. The record delivery of 95,200 beat out analysts’ consensus estimate of 91,000 and were better than the previous high of 90,700 cars delivered in the fourth quarter of 2018.

The stock has been rocked by a number of negatives over the past year, ranging from productivity and profitability question marks to distracting behaviour from its CEO, all of which cut Tesla’s share price in half over the past six months.

Tesla’s last quarterly earnings were a prime example. Delivered in late April, the financials saw a wider than expected loss of $2.90 per share versus the consensus expectation loss of $0.69, while revenue came in at $4.54 billion versus the Street’s $5.19 billion estimate. (All figures in US dollars.)

But Harris contends that Tesla’s numbers could be less of a worry in the long run than Musk, himself.

“If you look at it from a longer perspective, he has a massive edge over everybody else,” Harris said. “Competition is coming, so whether or not he’ll be able to stay with that, I’m not sure. If you can get past all this other stuff that goes on around it, I think that they’re one of the survivors in the electric vehicle market and I think that Tesla will do very, very well.”

“But the other thing is that he probably needs someone to run the business because running a car business is hard, it really is. Manufacturing is a hard business,” said Harris. “He’s kind of a visionary, which is nice but you need someone who actually understands the nuts and bolts of running a car company, and if Tesla actually had that, they’d be a better company.”

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