'Tesla's Excessive Investments' Highlight This Company Instead [Weekend Money]

Investments Beyond Cash Generation

"Hyundai Motor Group’s Investment Capacity Deserves Attention"

As Tesla’s stock price has fallen under the weight of massive investment burdens, some experts argue that the valuation of Hyundai Motor Group, which has superior capital-raising capabilities, should be raised.

Kang Sungjin, a researcher at KB Securities, recently stated in “Why Is Tesla Pushing Investments? – Implications for Hyundai Motor Group” that “the stock prices of automakers facing a paradigm shift in business are determined by their vision for the future and their ability to transition (investment capacity). The strengths and weaknesses between Tesla and Hyundai Motor Group are clearly visible,” he noted.

Researcher Kang explained that while Tesla is overwhelmingly superior in terms of autonomous driving vision, “in robotics, they are at a comparable level, and in terms of investment capacity, Hyundai Motor Group appears to be slightly ahead.”

On April 23 (local time), Tesla reported that its operating profit for the first quarter of this year reached USD 940 million (about KRW 1.387158 trillion), a 135.8% increase compared to the same period last year, surpassing expectations. However, its stock price plunged by 3.6%. Researcher Kang emphasized that “this was because the scale of investments announced by Tesla was much larger than expected.” Specifically, this year, Tesla plans to invest not only in six factories but also in robotaxis and semiconductor fabs, with the total investment expected to exceed USD 25 billion. Tesla also projected that it would record negative free cash flow for the remainder of this year.

He explained that although Tesla is highly regarded for its future business vision among automakers, “Chinese electric vehicle companies are rapidly advancing their autonomous driving and robotics visions, and outside of China, competitors such as Nvidia’s Alpha Mayo and Boston Dynamics’ Atlas are emerging, narrowing the gap with Tesla.” He added, “For Tesla, accelerating its investments to widen the gap with competitors and gain a lead in future business is a natural choice, but investment activities that exceed its cash-generating capacity can diminish shareholder value.”

Researcher Kang assessed that Hyundai Motor Group’s investment capacity is ahead of Tesla’s. In terms of capital-raising ability, Hyundai Motor Group is slightly ahead. Last year, Tesla’s operating profit and cash flow from operations were KRW 6.4 trillion and KRW 21.8 trillion, respectively. In contrast, Hyundai Motor Group recorded KRW 20.9 trillion and KRW 25.1 trillion, respectively. Regarding investment scale, Tesla plans to invest more than KRW 37 trillion this year, while Hyundai Motor Group announced an average annual investment plan of KRW 28.2 trillion.

This content was produced with the assistance of AI translation services.