San Francisco, CA – Tesla investors experienced a rollercoaster on Friday as stock prices plummeted by as much as 6%, equivalent to a staggering $32 billion loss, following reports from Reuters regarding Elon Musk’s EV company’s decision to scrap plans for an affordable electric car.
According to sources within the company and internal messages, Tesla is abandoning the production of a much-anticipated $25,000 electric vehicle, shifting its focus towards robo-taxi initiatives instead. This unexpected move contradicts Musk’s previous announcement in January that production for the affordable EV would commence at the Texas plant by late 2025.
Despite Musk’s swift denial of the Reuters report on social media platform X, the stock still remained down by 3.5%, resulting in a loss of approximately $19 billion. Investors are grappling with Tesla’s attempts to stay competitive amid the intense rivalry with Chinese car manufacturers, which are rapidly gaining market share.
The news comes hot on the heels of Tesla’s first year-over-year decline in vehicle deliveries since the onset of the pandemic, sparking concerns among prominent investors who are questioning Musk’s leadership as CEO. The company attributed the disappointing numbers to external factors, but critics, including Tesla bear Per Lekander, have painted a bleak future, suggesting that the stock could face potential bankruptcy.
As the market for electric vehicles becomes crowded with the influx of Chinese EV makers, traditional car manufacturers are also feeling the heat, prompting some to rethink their electric car production strategies. Ford, for instance, recently announced a delay in launching high-end EV models in favor of prioritizing plug-in hybrid vehicles as a cost-effective alternative.
With sales of electric vehicles recording a meager 2.7% growth in the first quarter, significantly down from the previous year’s 47% surge, analysts are speculating that the market might be reaching saturation among eco-conscious consumers. The challenge now lies in convincing skeptical gas-powered car owners to embrace the electric revolution in order to stimulate growth in the EV sector.
Tesla’s sales growth forecast for 2024 has been dampened by Musk’s earlier warning of a slowdown, attributing it to the overlapping growth stages of existing models and the planned affordable car launch. However, with the uncertainty looming over the fate of the affordable EV project, the future of Tesla’s sales performance and competitive edge remains uncertain.