2022 was, in a way, the year of Elon Musk. But if he made the headlines for his takeover of Twitter for 44 billion dollars at the end of October, the success of SpaceX’s astronautical launchers and the boom in sales of Tesla, the brilliant and temperamental boss suffered many disappointments. Tesla thus lost two-thirds of its stock market value in 2022, victim of fears over the demand for electric cars, the end of easy money on Wall Street, but also tribulations at the uncertain outcome of the social network.
On the one hand, the multi-billionaire sold several billion dollars of Tesla shares to finance the acquisition and then the operating costs of his new toy, selling another 3.6 billion in early December. And this, while he had said in the spring that he had no intention of selling more. Elon Musk also took the social network into the turmoil, laying off half of its employees. Suddenly, “Musk has lost all credibility with the investment community,” said Dan Ives, analyst at Wedbush Securities. It has become “untenable” to evaluate Tesla without taking into account the erratic management of Twitter, outbids Colin Rusch, of Oppenheimer.
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Unusual promotions
Long at the top of the ranking of the greatest fortunes, Elon Musk has suddenly abandoned first place in favor of the French Bernard Arnault, boss of LVMH. According to the Bloomberg Billionaires Index, Elon Musk has lost half of his fortune since January 2022, still retaining the tidy sum of 130 billion dollars. This evaporation is mainly due to the fall in Tesla’s valuation. This had however been multiplied by twelve in two years (2020 and 2021), breaking the ceiling of 1,000 billion dollars.
However, Tesla, which has just de facto promoted its boss in China Tom Zhu number 2 behind Elon Musk, announced at the beginning of the week the delivery of 1.31 million high-end electric vehicles in 2022. That is an enviable increase of 40 %. The problem is that the Fremont brand remains below its own forecasts (+50%) and Wall Street expectations. To boost its sales at the end of the year, Tesla even had to offer unusual promotions. In an email sent to employees – and consulted by the CNBC channel – Elon Musk had asked them to volunteer to deliver as many cars as possible before the end of 2022.
Observers are worried about a slowdown in sales growth. For the past two years, demand has exceeded supply for electric cars, but this trend should “reverse” in 2023, according to Adam Jonas, an analyst for Morgan Stanley. “Between a deteriorating macroeconomic environment, unaffordable prices for many and growing competition, there are obstacles to overcome,” he said. “There’s no question there are demand scares,” said Thomas Hayes, chairman of Great Hill Capital.
very expensive cars
The brand no longer has a virtual monopoly on electrics in the United States. General Motors, Ford, Nissan, the Korean Hyundai-Kia, the Volkswagen group, got into it. And, in the top of the range, Mercedes-Benz, BMW, Audi (Volkswagen), Polestar (Volvo), give it tough competition. Tesla still largely dominates the electric market in the United States with 65% of the market share (first nine months of 2022), but it was 80% in 2020! Its penetration should fall back to less than 20% in 2025, predicts S&P Global. By this time, the American electric cake will, it is true, have grown considerably.
Several observers fear that the Tesla, expensive (from 53,490 euros each in France up to 130,000), will suffer the rivalry of cheaper electric models. “The big manufacturers will arrive in force on the same niche for less. And there, it will be hard for Tesla”, anticipated two years ago Didier Leroy, then vice-president of Toyota.
Worse: a Reuters survey shows that used Tesla transaction prices are falling faster than those of other manufacturers, which will also weigh on demand for new models.
Opening of the German factory
Tesla’s dynamism is nonetheless astonishing. It is the manufacturer that grew the most in the world last year. The Californian firm even posted a 48% increase in sales in the United States last year. Another broken record: the Tesla factory in Shanghai delivered 710,000 vehicles in 2022 (+48% also). In 2020, Tesla passed the milestone of 500,000 cars sold worldwide for the first time, approaching one million a year later.
After losing a whopping $ 4.5 billion between 2016 and 2019, the “high tech” firm had managed in 2020 to finally generate a net profit. After the Shanghai site, Tesla inaugurated the German factory in Grünheide, near Berlin, last March. We hadn’t opened a new car factory in Western Europe since Toyota’s French site in Valenciennes in… 2001!
At 339 billion dollars, the market capitalization of Tesla, even in sharp decline, remains the first in the automotive world, and by far. It is ahead of that of Toyota (210 billion euros), Volkswagen (74), Mercedes (70.5), BMW (58.5), GM and Ford (49 billion dollars each), Stellantis (45 billion euros ). The valuation of Tesla is thirty times higher than that of Renault.
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