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If you’ve been watching Tesla stock, you know that its share price has more than doubled over the past year. Its steep valuation, with its shares trading at more than 130 times forward earnings, suggests investors aren’t just betting on Tesla selling more electric vehicles; they’re betting on a future where it dominates robotaxis, self-driving software, energy storage and even humanoid robotics — all at once.
Much of this optimism is rooted in Tesla’s undeniable edge in EVs and related software. But is there any other way to invest in the future of EVs and robotics without paying Tesla’s lofty premium?
One contender is Hyundai, a company that operates at the intersection of many of the same industries — EVs, self-driving technology, energy storage and robotics. Yet, the market tells a different story. Shares of the South Korean carmaker have slumped in the past year and trade at a fraction of Tesla’s valuation at just 4 times forward earnings.
A key factor in this disparity is Tesla’s dominance in EV sales. Tesla outsold Hyundai, which makes both battery and hybrid EVs, by more than two to one last year. Its vertical integration also helps extract more profit per vehicle. Rough calculations, based on net income and the total number of vehicles delivered last year, indicate net profit per vehicle of around $4,000 for Tesla and $2,200 for Hyundai.
Software is another differentiator. Tesla’s control over its software ecosystem remains a defining — and difficult to replicate — advantage. Unlike traditional automakers such as Hyundai, Tesla functions as much like a tech company as a carmaker, leveraging real-time data collection, over-the-air updates and proprietary systems to continuously refine vehicle performance.
Tesla’s driver-assistance systems benefit from a massive data set collected from its cars around the world, which helps continuously improve its software. This also positions Tesla well in new markets such as robotaxis, where its software and data-driven approach gives it a head start over rivals.
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Hyundai has also been ramping up self-driving features and testing its robotaxis. Here, Hyundai has taken a different approach, relying on traditional sensors such as lidar and radar, as well as cameras. These technologies have their strengths — lidar, for example, offers precise object detection, 3D mapping and superior performance in poor visibility conditions as it does not rely on visible light to operate.
But this approach comes at a cost. Lidar and radar sensors cost more than the cameras and neural networks Tesla uses, making large-scale deployment of full autonomy less cost-effective. Moreover, Hyundai’s smaller presence in the EV market means it has access to a lower volume of driving data, limiting its ability to refine AI-driven autonomous systems at the same scale as Tesla.
There are, however, areas where Hyundai has the upper hand — most notably in humanoid robotics. This is a market where Tesla, if successful, could capture a significant share of market that Goldman Sachs estimates could reach $38tn over the next decade, a prospect that has contributed to its lofty valuation. Tesla has outlined an ambitious vision for its robotics initiatives, particularly the Optimus humanoid robot — though, arguably, much of it remains more rhetoric than reality.
Hyundai, on the other hand, holds an 80 per cent stake in Boston Dynamics, the robotics company behind humanoid robots that can jump, carry heavy loads and manoeuvre with uncanny precision. Boston Dynamics has decades of experience in robotics, giving Hyundai a head start in exploring ways to integrate automation into its manufacturing processes and beyond.
Meanwhile, slowing growth of battery EV sales and competition from Chinese rivals have kicked off a price war in the EV market, pressuring makers to cut prices. Hyundai’s hybrid line-up and higher-margin vehicles like SUVs have helped provide a hedge against such market dynamics. As a result, the gap in gross margins between Tesla and Hyundai has narrowed in recent years, with Tesla at 18 per cent and Hyundai at about 20 per cent.
Hyundai, as a legacy carmaker, will inevitably remain more manufacturing-focused than Tesla, both in philosophy and operational structure. Tesla leans into its identity as a tech company, prioritising software and innovation. This fundamental difference ensures there will always be a significant gap in how the two companies are valued. But for investors looking for exposure to the future of EVs and robotics — without the sticker shock or volatility of Tesla — Hyundai just might be good enough.
june.yoon@ft.com
