Elon Musk's Tesla is set to close in 2024 following bad news in China, Hertz's exit from the EV market and reports that cold weather is turning Tesla's charging stations into “car graveyards.” is facing a significant drop in market valuation of $94 billion in just a few weeks. Electric car.
bloomberg report Elon Musk's Tesla faced a severe shock in early 2024, marking a dramatic shift from its impressive success in 2023, when the stock more than doubled, the company said. In the first two weeks of 2024 alone, Tesla faced a staggering $94 billion drop in market valuation, the company's worst start since its inception.
This dramatic economic downturn has seen rental car company Hertz sell tens of thousands of electric cars to buy gas-powered ones, further price cuts for Tesla cars in China, and an estimated drop in the range of the company's Model Y. This can be attributed to several developments, including a reduction in Recent reports of “car graveyards” occurring across the Midwest as Model S and Model X vehicles, as well as Tesla vehicles, are rendered inoperable due to the cold.
Tesla's past market success and huge market capitalization, which has made the company significantly larger than any other car company in the world, also make the company's stock highly sensitive to any negative news due to its inflated valuation. This has contributed to the current situation. The situation is also exacerbated by investor expectations that Tesla will pioneer true self-driving cars, a feature the company has yet to realize.
The company's woes come against the backdrop of an overall slowdown in EV demand, particularly in the United States. As Cowen analyst Jeffrey Osborne points out, this stagnation is the biggest concern for investors. “Investors' main concern with Tesla is stagnant growth,” Osborn said in an interview. Recent price cuts for Tesla cars in China are also giving customers the impression that the situation is a “race to the bottom in the EV industry given the intense competition in the market.”
Rising production costs are also having a negative impact on the company, in part due to pay increases for employees at its U.S. factories. Ivana Derevska, Chief Investment Officer at Spear Invest, commented: “We are facing an EV downturn, but competitive dynamics are exacerbating cyclical pressures…The price cuts and plummeting profit margins are all due to these adverse competitive dynamics.” Tesla also had to redirect shipments to its Berlin factory and suspend much of its production there for two weeks due to military actions and security concerns in the Red Sea region.
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Lucas Nolan is a reporter for Breitbart News covering free speech and online censorship issues.
