Minus 20% or gains of 13,500 dollars depending on the model and the case: when Elon Musk decides to launch the Tesla sales period, he does not do things by halves, and throws a hell of a stone into the pool of competition which is difficult to follow.
A sign that the brand is doing well? Not really, and even rather the opposite, quite logically analyzes Business Insider, who describes Musk as “back against the wall”. And the clouds, indeed, have been piling up for months on the formerly infinitely pink future of the world leader in electric cars.
It will have escaped no one: Tesla is in a very bad position on the stock market and went through much more violent turbulence in 2022 than the other tech companies, which are also battered. The manufacturer, whose valuation had once exceeded 1,000 billion dollars, saw its share price fall by nearly 65% in a few months.
A vertiginous fall that the time spent by Musk at Twitter, his new toy, has partially favored, provoking the logical ire of the brand’s shareholders, unhappy to see his boss thus focused on other objectives.
The biggest concern concerns demand: for a builder whose waiting lists were once full, it is now starting to seriously crumble. This is particularly the case in China: as the New York Times explains, Tesla now faces stiff competition there, in particular the very dynamic BYD, and has seen its sales fall in recent months.
In December and despite promotions that caused some serious turmoil, Tesla sold 56,000 new vehicles in the Middle Kingdom, down 21% compared to the same month in 2021, and 44% compared to November: if the country remains very fond of Musk’s cars, the tendency to cause some panic.
Second hand, second chance
Another sign has not deceived observers in recent months. After a long, crazy period of scarcity during which the price of second-hand cars could sometimes cost more than the same new models, the trend has completely reversed.
The used Tesla “bubble” has thus burst, to use the words of Reuters, raising fears for the demand for new vehicles, and undoubtedly precipitating Musk’s decision to proceed with their drastic price reduction.
This can also be explained by the concern about interest rates, constantly rising to fight against inflation, a movement against which Musk has been upwind for months.
According to him, the tightening of the Fed, which increases the cost and complicates the financing of the acquisition of a new car, risks precipitating the United States into a serious recession – even a major financial crisisthe loans to be repaid are no longer bearable for people who have already contracted them.
Trend is concerning. Fed needs to cut interest rates immediately. They are massively amplifying the probability of a severe recession.
— Elon Musk (@elonmusk) November 30, 2022
The competition, builders with very strong backs, also furbishing its weapons in the rest of the world, Tesla therefore had to try everything to overtake its rivals. Problem: people who have recently invested in one of the manufacturer’s vehicles feel deeply betrayed, in particular because the resale value of their acquisition has suffered a sudden and brutal discount.
In addition, the firm’s short-term profits will, logically, suffer greatly from these monstrous balances. While Tesla has already been put in difficulty by recent results deemed disappointing, its revenues could thus drop by 25% in the coming months.
The bet is that this will only be temporary, and that the boosted demand will allow the brand to reverse the worrying trend of erosion.
Global demand for electric vehicles remains strong and growing, and Tesla still has a big lead over its sometimes-struggling competitors—and its cars are suddenly becoming much more competitive. Perhaps it was time for her, and to save her skin, to stomp once again into the anthill.