Tesla Broke its Streak

Tesla (Nasdaq: TSLA) broke its streak in 2024

For the first time in a decade, the company failed to sell more cars than the previous year. In 2024, the company sold 1.79 million cars, 1.1% below 2023. It’s the first time since 2011 that year over year sales dropped.

You might believe, based on recent news, that this is the sign of the end for electric vehicles (EVs). But you would be wrong. And there’s an investment opportunity emerging from this sector.
Shares of Tesla soared in 2024, but fell slightly on the news:

The sales slump could have been worse, but Tesla ramped up its sales in the last half of the year by offering big deals, like 0% financing and low-price leases. Shares fell in part on anticipation of an ugly fourth quarter earnings report. And the outlook for 2025 can’t be good either.

With the new administration in place, electric vehicles (EV) could get more expensive. Up until now, EV buyers received up to $7,500 in tax credits for buying. However, the new president plans to “eliminate the electric vehicle mandate” which includes that tax credit.
EV’s make up about 8.1% of new vehicle sales (according to the Associated Press) in the U.S. But the U.S. makes up just 10% of the global EV market. China dominates EV sales. Rho Motion, a leading EV research firm, predicts that EVs will make up 20% of global vehicle sales in 2025. That prediction supports the strong performance of EV stocks, as you can see from the chart of Global X Autonomous and EV ETF below:

You would imagine that, with global EV sales rising and car maker stocks headed higher, it would be a great time to own lithium miners…but you would be wrong. As you can see from this chart of the iShares Lithium Miners and Producers ETF below:

And this is where we see a potential opportunity. EV makers’ stocks and lithium miners’ stocks diverged. They should trade in tandem with one another. Demand for cars equals demand for batteries. However, the entire lithium production sector fell 60% in the past eighteen months.

We believe these trends will return to normal. To do that, either the EV stocks must fall, or lithium miners must rise. And we see the latter as a much more likely scenario.

That could be a big opportunity for investors in 2025.

For the Good,

The Mangrove Investor Team

Numbers You Need to Know

17 Million

Rho Motion, the leading electric vehicle (EV) research house, states that 17.1 million units were sold in 2024. Overall, global EV sales grew by 25% in 2024 compared to 2023. (Rho Motion)

8 Kilograms

A typical EV battery has about 8 kilograms of lithium, although this can often be much more depending on the battery size – a Tesla Model S’ battery, for example, contains around 62.6 kg of lithium. (EV Blog)

1859

One of the first uses of lithium was medicinal. It was proposed as a treatment for gout by Sir Alfred Baring Garrod in 1859, and while it did not relieve gout, it was found to calm manic gout patients. (International Lithium Association)

What’s New in Sustainable Investing

Global ESG Fund Flows Increase in Q4

In the fourth quarter of 2024, sustainable funds globally recorded the highest inflows of the year, reaching USD 16.0 billion —a significant increase from the revised USD 9.2 billion recorded in the third quarter. (Morning Star)

American Airlines Faces Backlash For ESG Investments In Employee 401(k) Plans

A federal judge ruled that American Airlines violated its legal responsibilities in managing employees’ retirement assets by encouraging environmentally and socially responsible investing in its 401(k) plan. (Yahoo Finance)

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