Tesla's recent sales and market performance have taken center stage as the electric vehicle (EV) giant grapples with significant challenges. While the company attempted to rally at the end of February, closing at $293.05 and up nearly 4%, it still couldn't escape the shadow of prior losses, marking nearly a 28% decline for the month, noted Barron's Al Root.
Tesla's stock crash was its worst month since December 2022, and the stark drop paints a troubling picture for investors. Following the high of $479.86 per share back in mid-December, the company has effectively lost about 40% of its value. Comparatively, the S&P 500 saw only a 2% drop last month, making Tesla's struggle more pronounced.
Recent statistics amplify these worries. Producing just 9,945 EVs registered across Europe this January, Tesla witnessed a remarkable decline from the previous year's figure of 18,161, according to the European Automobile Manufacturers' Association. While the overall EV market thrived, growing by 37.3%, Tesla saw its sales decline due to increasing competition.
Compounding Tesla's struggles is the controversial political involvement of CEO Elon Musk, which has sparked public outcry. His support for Germany’s far-right Alternative for Germany (AfD) party has been deemed unacceptable by significant parts of the German populace. A recent Quinnipiac poll revealed 73% of Germans find Musk's political presence unacceptable, contributing to the disfavor surrounding the company. Musk’s personal antics, from supposedly making Nazi gestures at rallies to inflammatory remarks about prominent public figures, are complicaining Tesla’s public image and likely affecting sales negatively.
At home, the view toward Musk's political entanglements is equally dim, with recent protests erupting at Tesla showrooms across the nation, driven by public discontent centered around the DOGE initiative. Surveys indicate widespread disapproval of Musk's prominent role within the Trump administration, amounting to a 53% opposition compared to just 39% approval.
Despite the turmoil, there is cautious optimism circulating surrounding Tesla's upcoming initiatives. With robotaxi projects and the much-anticipated rollout of more affordable EVs, analysts are holding on to the belief of potential recovery. Adding to the hope, the upcoming first quarter delivery report, expected to release next month, may provide positive results due to the refreshed Model Y debuting for sale.
Data reveals Tesla's struggles aren't confined solely to the stock market. The company recently experienced sales declines on French ground as well, where it registered only 2,395 cars last month—a sharp 26% decline from the same period last year. This decline was against the backdrop of the French automotive market, which saw only a 0.7% drop overall, displaying Tesla's shared woes amid broader industry health.
The growth spurt of western competitors also signals threats. Dominant competitors like BYD Co. have gained traction and, for the first time, outpaced Tesla's sales within the U.K. Further complicate the market are rising cheaper Chinese electric vehicle brands - with SAIC Motors registering 19,349 new cars, hinting at changing consumer preferences.
Beatrix Keim of the CAR Institute reinforces the need to reshape tbrand perception, noting how customers might not even realize they're buying from Chinese names due to clever branding. The dramatic growth of Chinese EV entrants, particularly the MG brand, points toward challenges for traditional companies like Tesla.
Analysts argue Tesla remains one of the most profitable automakers, managing to maintain its position amid fluctuators, ranking among the top ten globally. Tesla's revenue still largely stems from car sales—over $77 billion of the $97.69 billion generated last year came from EV sales. Nevertheless, its struggles to achieve consistent growth are concerning as it recorded sub-4% growth over four of the last five quarters, raising red flags for many investors.
This mounting pressure reflects on Tesla's valuation. It's seen as overvalued considering its present operations primarily revolve around car making, yet the P/E ratio stands at 142. Investors remain unsteady as they weigh projections of Tesla's transformative future with core earnings stalling.
With turbulent times on the horizon, Musk's role may need reevaluation, not only due to shareholder concerns but also market sentiment. Tesla's ability to capitalize on its advancements, coupled with solid deliveries, will be under scrutiny. Will Tesla rise to its previous high mark or falter among rising competition?