A number of reasons are given
Tesla has lost more than $94 billion in market value since the start of 2024, according to Bloomberg. This was the biggest collapse since the company's IPO in 2010. The fall in shares is due to the refusal of Hertz Global Holdings Inc. from Tesla electric vehicles and lower prices for electric vehicles produced in China.
The news comes as demand for electric vehicles slows, especially in the US. Investors are expressing concern about Tesla's growth stagnating, and Cowen analyst Jeffrey Osborne says falling prices in China are only fueling fears of a “race to the bottom.” in the electric vehicle industry due to intense competition.
The collapse in Tesla's capitalization is very strong; in percentage terms, the fall of shares by 12% since the beginning of January is the worst indicator since 2016. Making matters worse is Tesla's aggressive price cuts since early 2023, which have led to a sustained decline in profits. Tesla's gross profit share fell from 27.9% to 16.3% in the third quarter. As wages increase for manufacturing workers in the US, the situation becomes more difficult for the manufacturer.
Ivana Delevska, chief investment officer at Spear Invest, emphasizes that Tesla is experiencing a cyclical downturn in the electric vehicle market, which is exacerbated by competitive dynamics. A change in the supply route to Berlin due to geopolitical events and the suspension of production in Germany added to the problems for the electric vehicle manufacturer.
Despite declining market value and challenges, Tesla continues to play a key role in the global transition from gasoline to electric vehicles. This is due to the fact that the company is ahead of its potential competitors. It was recently reported that China's BYD surpassed Tesla in sales volume in the fourth quarter, but BYD still lags behind in revenue and profit. In addition, BYD does not sell its cars in the US, where Tesla maintains leadership.