Why is Tesla falling in the stock market? What about Elon Musk’s company

Elon Musk became a Tesla shareholder in 2008 and became its top owner and first executive. But the big electric car maker goes far beyond its competitors. The question is “Is Tesla an automotive manufacturing company or is it actually a technology company?”. Under the umbrella of decarbonization, Tesla has developed technology to power the autonomous and connected car. This last aspect raises doubts about the use that the company can make of the data generated by its cars. And, with the use of artificial intelligence combined with autonomous driving, fears are growing and the question arises as to whether some vehicles could be remotely controlled and what use could be made, for example, of the pickup Cybertruck, which has already been tested for bullet resistance.

But mobility is only one part. Mastery of the charger network and battery manufacturing give Elon Musk’s company control that goes beyond mobility. The company announced last year that it would open up the charger network to competitors (now only Tesla cars can use it). But that hasn’t happened yet and the New York Times points out that Musk might be hesitant, as opening up his network to third parties could boost sales for other electric car makers. And while other manufacturers have a bottleneck at charging stations that slows their growth, Tesla has long overcome this problem with its own network. And in addition to powering cars, Tesla’s batteries also have an important market in self-consumption installations. Thus, Elon Musk also gains a presence in the homes of these customers.

A bad year

Until 2024 Tesla’s growth seemed unstoppable, but problems have arrived. The company’s stock market valuation fell nearly 40% in the first quarter. Car sales, for the first time since 2020, were in decline, down 4%. The results were not as expected and registered a drop of 55% compared to the same quarter of the previous year. Analysts at Deutsche Bank questioned Musk’s leadership of the company, seeing him as distracted by his other businesses. The response of the first executive was the announcement of the dismissal of 10% of the workforce.

And in the second quarter things did not improve. Tesla’s profit plunged 45%: it earned $1.478 billion (€1.357 billion) between April and June, compared with $2.703 billion in the same quarter of 2023. The company’s revenue improve 2% to $25.5 billion, but thanks to a boost from the energy generation and storage division, because turnover from car sales fell 7%. Vehicle sales were also down, with 443,956 units, 4.8% less.

Musk attributes these declines in accounts to increased operating costs and investment in artificial intelligence. But to face the new school year, the company lowered the price of its cars, and from September sales rebounded, and so did the stock, which touched $262, practically the highest of the last 12 months. But suddenly, in October, the title plunged below $220. The cause must be found in his disappointment robotaxi (autonomous driving taxi), the Cybercab, which has not been liked by the markets.

Musk, who for months fueled expectations by describing the Cybercab as a revolutionary vehicle destined to forever transform the world of transport and catapult Tesla’s stock market valuation, did not convince with an event that Elon Musk himself called a “party” . Some analysts, such as Wells Fargo’s Colin Langan, criticized Tesla’s demonstration at Warner Bros. Studios in Los Angeles of 50 autonomous vehicles, including several Cybercab units, as little more than a staging. Others, such as Bernstein analyst Toni Sacconaghi, found the presentation to be “disappointing” and lacking in detail.

To remedy the situation, Musk has already moved. It has appointed Omead Afshar as supervisor of manufacturing and sales strategy for Europe and North America for automotive. Afshar has until now been one of the South African tycoon’s trusted men inside the electric vehicle maker, according to information from Bloomberg and The Wall Street Journal.

Musk’s political stance doesn’t help either. Tesla’s sales in California fell this summer for the first time in its history. According to the Automotive News portal, sales fell by 12% between January and June of this 2024, but the decline has been particularly sensitive in Santa Clara County (Silicon Valley), where the brand’s sales fall by 21% throughout the month of July. US media attributed this to the fact that potential customers in this more progressive region are turning their backs on Musk because of his support for Donald Trump.