In the past few months, Tesla has created the impression that it is vulnerable to competition from established automakers. In addition, rising borrowing rates have increased the cost of Tesla’s electric cars for consumers who take out loans to pay for the vehicles. Shares of Tesla have dropped by 65 percent since the beginning of 2022 due to growing evidence that the company has a limited lifespan. As a result of this reduction, investors have been forced to concentrate their attention more on conventional indicators, such as sales and earnings, rather than on aspirations of world supremacy. In this article, viewpoint on the matter is presented.
Elon Musk, the chief executive officer of Tesla, is under increased pressure to concentrate on the production of automobiles rather than on revamping Twitter after the company announced on Monday that deliveries in the final three months of the year increased by 18 percent compared to the previous quarter. This news disappointed analysts on Wall Street. Tesla reported that it had delivered 405,000 electric cars during the months of October and December. Analysts on Wall Street anticipated that Tesla would sell approximately 420,000 vehicles, which would be an increase from the 343,000 units sold in the previous quarter. The total number of automobiles that were sold by the corporation in 2022 was 1.3 million, representing a growth of 40 percent from the previous year. This fell short of the annual growth target of 50% that Tesla had set for itself. Despite the fact that the increases were remarkable by the norms of the auto industry, Tesla has become the most valuable carmaker in the world as a result of its explosive growth, which is typically linked with the rate of expansion of Silicon Valley technology companies.
Deliveries for the fourth quarter came in lower below analysts’ predictions, who had previously trimmed their expectations, and lower than what Tesla officials had estimated deliveries would be just a few months ago. The fact that Tesla manufactured 440,000 automobiles during the quarter, which is 34,000 more than it delivered, suggests that issues with its supply chain and production challenges are not the primary cause of the company’s dismal sales. On Twitter, Martin Viecha, who is in charge of investor relations at Tesla, explained that the difference between deliveries and manufacturing was due to the fact that customers’ vehicles were still in transit. Because of the New Year’s holiday, there was no trading that took place in New York on Monday. However, investors are likely to be convinced by these data that Mr. Musk is placing an excessive amount of emphasis on Twitter, which he purchased in October.
On Twitter, Gary Black, managing director of an investment vehicle called the Future Fund, remarked that there was “no way to sugarcoat this.” He forecast that analysts’ predictions of Tesla’s sales and earnings in 2023 will be lowered. Earnings for 2022 will be reported by Tesla on January 25.
According to a story by Reuters, Mr. Musk attempted to soothe Tesla staff during the previous week by asking them not to obsess on the stock price and reiterating assertions that the automobile manufacturer would become the most valuable company in the world. A major focus of investor concerns is China, which has the largest automobile market in the world. The precipitous increase in the number of Covid cases in China has had a negative impact on demand and compelled the company to intermittently halt production at its largest factory, which is located in Shanghai.
Further putting doubt on Mr. Musk’s capacity to attain world domination in the automotive sector is the fact that the Chinese firm BYD has raced past Tesla in electric vehicle sales in China. The rate of increase in Tesla sales is significantly higher than that of any significant competitor. In addition to being one of the most profitable automakers in the world, the firm is currently expanding production at new facilities in both Texas and Germany. Traditional automakers such as Ford, General Motors, and Volkswagen are the company’s most formidable competitors, but they aren’t the only ones. These businesses have decades of experience in mass producing automobiles at low costs, and some investors feel that these automakers could catch up with Tesla sooner than was originally anticipated. Increasing borrowing rates are another challenge for Tesla, which is also seeing a decline in consumer demand. The length of time customers have to wait for a Tesla model has decreased, and the company has reduced the price of its vehicles in China while also providing buyers in the United States with financial incentives.
Car purchasers, particularly politically liberal, environmentally conscious customers who have a propensity to purchase electric vehicles, appear to be steering clear of Tesla as a result of Mr. Musk’s behaviour. His unpredictable conduct on Twitter and his strong comments on the social media platform have won him the affection of conservatives and CEOs in Silicon Valley, but they have infuriated other users.
An analyst at Wedbush Securities named Daniel Ives, who has pleaded with Mr. Musk to concentrate his efforts on Tesla, stated that the company’s deliveries during the fourth quarter were satisfactory despite the challenging economic climate. On Twitter, Mr. Ives stated, “We believe this was a relatively solid performance.” [Citation needed] Since Tesla vehicles were qualified for federal subsidies on January 1st, sales may have been given a bump as a result. Because of a recent change in the law, there is no longer a cap on the number of vehicles that can be produced by a single manufacturer and still qualify for tax credits of up to $7,500. Tesla had used up its limit. The condition that vehicles must be built in the United States, Canada, or Mexico in order to be eligible for credits is satisfied by Tesla automobiles manufactured in both Texas and California at the company’s manufacturing facilities. Although Mr. Musk is an active user of Twitter, he did not respond right away on Monday to the delivery number announcement. On Sunday, he sent out a message to his followers wishing them “a nice day 1 2023” and adding, “One thing’s for sure, it won’t be dull.”
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