Tesla, the iconic electric vehicle (EV) maker, has seen its market value drop by two-thirds in 2022. Despite making almost $9 billion in profit in the first three quarters of the year, the company has faced concerns about demand for EVs, issues with CEO Elon Musk’s management of Twitter, and a downturn on Wall Street.
While Tesla still holds a 65% market share in the luxury car category, analysts predict this will shrink to just 20% by 2025 as competition increases and the economy worsens. In addition, Tesla’s production in its Shanghai factory has reportedly been suspended due to Covid-related issues.
Tesla Competes With Rivals in EV Market
To boost sales, the company has offered a $7,500 discount on its Model 3 and Model Y vehicles, as well as 10,000 miles of free fast charging, to US customers.
Tesla’s market value drop of two-thirds in 2022 has raised concerns about the future of the company.
While Tesla has made significant profits in the first three quarters of the year, analysts believe that the days of Tesla being the sole player in the EV market are over.
In 2023, traditional automakers are expected to roll out EV models at an unprecedented pace, leading to increasing competition for Tesla. This is particularly evident in the luxury car category, where Mercedes-Benz, BMW, Audi, Polestar, and Rivian have all entered the market. S&P Global analysts predict that Tesla’s market share will shrink to 20% by 2025.
In addition to increasing competition, Tesla is also facing economic challenges. Analyst Adam Jonas of Morgan Stanley has described 2023 as a “reset” year for the EV market, citing increasing competition and a worsening economy with rising living costs due to inflation.
The situation in China is also not helping matters, as production at Tesla’s Shanghai factory has reportedly been suspended due to Covid-related issues.
CEO Elon Musk has remained optimistic about the future of Tesla, stating that “Tesla will be by my best guess the most valuable company in the world in less than five years,” despite the challenges the company is facing. However, some analysts believe that the problems at Tesla go beyond macroeconomic conditions and high-interest rates.
Read more: Bitcoin hacking: Creators, owners lost a lot of cryptocurrencies amid non-stop cyberattacks
Elon Musk FacesCcriticism For Selling Company’s Stock
Colin Rusch of Oppenheimer has argued that it has become “untenable” to separate the future of Tesla from Musk’s management of Twitter, which he took over in October.
Musk has faced controversy for firing more than half of the company’s staff and selling billions of dollars of Tesla stock to finance his new venture, in breach of pledges to stop selling the stock.
He has also suspended certain journalists and invited banned users, including former President Donald Trump, back to the platform. Rusch believes that these actions will drive some buyers towards other EV options that are not associated with controversy.
Despite these challenges, some remain optimistic about the future of Tesla. Investment firm Robert W. Baird believes that the company is the “best positioned in the automotive market” and still recommends buying Tesla stock despite the recent crash.
Wedbush’s Dan Ives has argued that Tesla needs “a CEO to navigate this Category 5 storm” rather than one “focused on Twitter.”
In an effort to boost sales, Tesla has offered a rare $7,500 discount on its Model 3 and Model Y vehicles, as well as 10,000 miles of free fast charging, to US customers. The company has also made efforts to expand its international presence, with plans to set up a manufacturing plant in Berlin and potentially expand to other European countries.
Despite these efforts, Tesla’s stock has recovered by only 12% in the last two days and remains down 65% compared to the beginning of the year. Only time will tell whether Tesla will be able to overcome the challenges it is facing and achieve its goal of becoming the world’s most valued company.
Read more: COVID-19 actual death toll is still undetermined, three years since the outbreak
