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A leading climate fund is dropping its support of Tesla after declaring it an overvalued stock, according to a new report.
“We don’t see upside,” Thomas Sorensen from the Nordea Global Climate and Environmental Fund, told Bloomberg by phone on Thursday. “What’s needed in cash flow generation to get to the current valuation -- we don’t see that happening.”
Investors have continued their enthusiasm for Tesla’s growth in recent months as the company prepares for deliveries of its Model 3 vehicle, priced for the mass market. Over the course of 2017, the company saw its shares rise 60 percent in value.
The speed of adoption of new technologies is making it difficult for investors unfamiliar with the green energy landscape to make educated investments in electric car technologies, the firm said.
“It’s going to be a race to the bottom for the whole industry,” Sorenson said. “In this big transition period, it’s very tough to point out the winners and the overall profitability of the sector. The risks are too high.”
Tesla is expanding its reach in the battery industry by signing a new contract with the South Australian government to build the biggest battery in the world after a power outage sank the state into darkness last year. CEO Elon Musk vows to complete the project within 100 days, backing his promise with a confident money-back guarantee.
Tesla won the tender for the installation in July and now, according to South Australia’s Energy Minister Tom Koutsantonis, work is on track to slip the switch in two months, when summer season begins in Australia and demand for electricity peaks.
So far, Tesla has led the technical revolution in electric cars that has made the category appealing to the upper class. Now, companies like Dyson and traditional car manufacturers are beginning to participate in the electric category, which could squeeze Tesla’s future profits.
By Zainab Calcuttawala for Oilprice.com
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Zainab Calcuttawala is an American journalist based in Morocco. She completed her undergraduate coursework at the University of Texas at Austin (Hook’em) and reports on…