Elon Musk’s Tesla has faced a steep $94 billion reduction in market valuation in the initial weeks of 2024, based on bad news in China, Hertz fleeing the EV market, and reports of Tesla charging stations turning into “car graveyards” due to cold weather disabling electric cars.
Bloomberg reports that Elon Musk’s Tesla encountered a severe jolt at the start of 2024, marking a drastic shift from its remarkable success in 2023 when its shares more than doubled. In just the first two weeks of 2024, Tesla faced a staggering $94 billion reduction in market valuation, its worst beginning to any year since the company’s founding.
Dead Tesla pushed in frigid Chicago temps (Fox 32 Chicago/YouTube)
This drastic downturn can be attributed to several developments, including rental car company Hertz selling off tens of thousands of electric vehicles to buy gas-powered cars, further price reductions for Tesla vehicles in China, a reduction in range estimates for the company’s Model Y, Model S, and Model X vehicles, and recent reports of “car graveyards” across the midwest as Tesla vehicles are disabled due to cold weather.
Tesla’s past market success and its huge market capitalization, which made it significantly larger than any other car company globally, have also contributed to its current situation as the company’s stock became highly susceptible to sharp reactions to any negative news due to its inflated valuation. This is also compounded by investors’ expectations for Tesla to pioneer truly self-driving vehicles, a feature which the company has yet to deliver on.
The company’s difficulties are set against a backdrop of a general slowdown in EV demand, particularly in the United States. This stagnation is a primary concern for investors, as noted by Cowen analyst Jeffrey Osborne. “Investors’ main concern on Tesla is stagnating growth,” Osborne said in an interview. Recent price cuts of Tesla vehicles in China are also giving customers the impression that the situation is “a race to the bottom for the EV industry given intense competition in that market.”
Increasing production costs — partly due to pay raises for workers at its U.S. plants — are also having a negative effect on the company. Ivana Delevska, chief investment officer at Spear Invest, commented: “We are going through a cyclical downturn for EVs, but competitive dynamics are exacerbating the cyclical pressures… Price cuts and plummeting margins are all a function of these unfavorable competitive dynamics.” Tesla also had to redirect shipments intended for its Berlin plant and suspend most production there for two weeks due to military actions and security concerns in the Red Sea region.
Read more at Bloomberg here.
Lucas Nolan is a reporter for Breitbart News covering issues of free speech and online censorship.