Tesla emerged as the most talked-about auto stock in 2018, even though Fiat Chrysler Automobiles has a better legacy in the auto making industry than Tesla. For FCAU, 2018 was a rough year in the stock market with its share prices dropping ~19% over the last 12 months. On the other hand, Tesla’s share price rose 7%, but it’s difficult to draw a conclusion on that basis alone -- if the year had ended a week earlier, Tesla’s price would have dropped by 5%. Volatility surrounding Tesla has been an area of concern.
Perhaps a more useful way to look at the two companies is by their respective growth strategies.
While FCAU’s growth story is an impressive one with an ever expanding SUV brand boosting the company’s margins, Tesla is yet to report a full year profit.
According to one Morgan Stanely analyst, however, Tesla has the potential of an eventual addressable market at $15 trillion – nearly 20% of the entire world's GDP. Tesla has a vision, but the financial support needed to achieve it is enormous, particularly for a company that already burns cash at an alarming rate. In the nearer term, for fundamental investors, the FCAU growth strategy may be more sustainably profitable and scalable.