“From the biggest ever to the worst ever. The game changer Tesla Kingdom, which started as an electric vehicle startup in 2003 and shook the global automobile industry, is collapsing in less than a decade. Tesla, which has seen its “biggest-ever” growth despite the unprecedented recession of lack of semiconductor chips and supply shortages during the COVID-19 pandemic, is expected to be recorded as the “worst-ever” stock price drop after falling this year. As the market’s fandom for Tesla quickly cooled, the ransom, which once exceeded $1 trillion, shrank to less than half. The New York Times (NYT) on the 22nd (local time) questioned Tesla’s ability to maintain control in the global electric vehicle market, as Tesla’s future faced amnesty due to sluggish business and Elon Musk’s “owner risk.” It was pointed out that Tesla has reached its fundamental competitiveness limit in addition to the owner risk that emerged after Musk’s acquisition of Twitter.The crisis is best illustrated in China, the single largest market. According to the China Car Association (CPCA), Tesla’s sales in China this year (as of the end of last month) increased 59% year-on-year. Although it seems to be growing at a high rate, Tesla’s biggest competitor, BYD, has jumped three times. He beat Tesla last year to secure the lead, and this year, he is widening the gap with second place. Tesla’s Shanghai plant has begun to cut production by 20% as inventory accumulates in weaker-than-expected sales. Tesla, the symbol of “No Discount,” also carried out a promotion in October to cut the selling price of Model 3 and Model Y in China by 5 to 9%. But the result was not good. “Tesla is facing serious challenges in China, the largest market, behind local native companies,” NYT evaluated.The situation in Europe and the United States is more serious. Tesla is on the verge of losing its market leader to Volkswagen, which is rapidly increasing its sales in the European electric vehicle market. According to EU-EVs, a European electric vehicle statistics site, Volkswagen’s market share in Europe in the third quarter of this year is 16.48%, which is about to overtake Tesla (16.94 percent). During the same period, Hyundai Motor closed the gap to 7.15 percent, Audi 5.54 percent, BMW 5.47% and Mercedes-Benz 5.15 percent, competing for third to sixth place. In the U.S., while Ford, General Motors (GM), and Hyundai Motor are rapidly eroding Tesla’s share, it is expected that Tesla’s share will be more difficult as GM’s luxury car brands Cadillac and Nissan, which will release new cars next year, join. As sales were expected to be sluggish, Tesla has doubled the discount range of Model 3 and Model Y by the 31st to run out of inventory. However, the U.S. economic media CNBC analyzed that “Tesla’s discount on popular models is a clear sign that consumer demand is weakening.”
The new car strategy, which was the driving force behind Tesla’s high growth, is also reaching its limit. Tesla has not released new cars since it released Model 3 in 2016 and Model Y in 2020. The release of the electric pickup truck “Cybertruck,” which is being prepared, has been delayed until the end of next year due to several delays in production schedules. Compared to the release schedule (2021), which Tesla announced when it first unveiled Cybertruck to the media in 2019, it was more than two years late. As competition in the electric pickup truck market intensifies, the main reason for the delay in the launch is that it is experiencing major confusion such as changing the performance of new products. Foreign media said Tesla’s Cybertruck will be released later than Ford, Livian, and GM’s competitive models, signaling that Tesla is far behind in the industry’s fight to launch new cars.In Germany, the original country of the automobile industry, antipathy against Musk is rapidly spreading to post-Tesla. Musk lashed out at the incident of suspending Twitter accounts of journalists critical of him as a “press suppression,” and it is close to a boycott. According to a survey of 1010 people conducted by German market research firm Falls in the first week of this month, about half of the respondents said, “The acquisition of Twitter negatively affected Tesla’s image,” adding, “We will not purchase Tesla vehicles in the future.” This movement of Tal Tesla also affected the decline in demand. The Tesla production plant in Berlin, Germany, produced 3,000 units last week (12th-18th), far below the original target.Tesla’s high-flying stock price fell sharply this year, returning to the level of two years ago. Tesla’s stock price, which was listed on the Minasdaq market on the 25th, fell 1.76% from the previous day to close at 123.15 dollars, falling for the sixth consecutive trading day. The stock price has accelerated its plunge since late October and has halved in two months. The market capitalization, which was well above $1 trillion due to the fall in stock prices, has now shrunk to $388.9 billion.
Wall Street said, “Tesla’s plunge in stock prices is a sign that investors no longer believe Musk’s pledge to achieve annual sales of 20 million units by 2030.”The fact that Musk is also preoccupied with acquiring Twitter, which he admitted to buying at high prices, also encourages the stock price to plunge. Since the acquisition of Twitter, the value of Tesla’s brand has been falling in real time as concerns over Musk’s dispersion of interest and the massive sale of Tesla’s stake have been reflected. Investors cited Musk’s continued political remarks, radical restructuring after the acquisition of Twitter, and impulsive and self-righteous management as the biggest risk factors that encourage stock prices to fall. Axel Schmidt, senior management director of consulting firm Accenture, criticized Musk’s “distractions” that have continued since the acquisition of Twitter, saying, “Tesla’s CEO position is not a “part-time job.”Tesla’s stock price decline is expected to continue next year due to various unfavorable factors. This is because the ransom has risen too high compared to the actual value. Goldman Sachs, a global investment bank, recently lowered Tesla’s target stock price to $235 from $305.
“Tesla is still an expensive stock,” said Andrew Left, founder of Citron Research. “It’s not over yet,” he said, predicting further declines. According to the financial information company FactSet, Tesla’s stock price return ratio (P/E) has been 46.7 times over the past 12 months, down more than 1196 times in April last year, but it still exceeds the S&P 500 average of 18.1 times.
JENNIFER KIM
ASIA JOURNAL
