Tesla lost $244 billion in value in one month!

Since the announcement of losing its status as the world’s leading electric car manufacturer, Tesla‘s golden age has vanished.

The wolves of Wall Street are back. After earning hundreds of billions of dollars from Tesla’s stock, they now realize that they need to return to some reality: a car manufacturer, no matter how trendy, cannot be valued at 1 trillion dollars. This was the case at the peak of its glory, after the Covid pandemic, with a stock price at $407 and a market capitalization twice that of all car manufacturers combined. Some of which sell nearly 10 million cars per year.

Has the euphoria faded? On Friday, January 26, 2024, Tesla’s stock was worth only $182, a 31% drop compared to the previous month. Panic is spreading on the markets and among small investors who are losing everything. On January 24, 2024, the stock plunged by 12%, marking a real stock market crash.

It seems that analysts, increasingly focused on the electric vehicle industry, have realized that Tesla’s house of cards is fragile. A very limited range and only one model that outperforms, the Model Y. All others are ultimately very limited globally, despite what super fans of the brand may think.

Towards a bloodbath?

The problem is that the Model Y is increasingly targeted by competitors. Tesla is forced to cut prices and reduce its margins, which once again does not sit well with the markets. Especially when industry leader Carlos Tavares, CEO of Stellantis, rings the alarm and talks about “an impending bloodbath if Tesla continues its price war on electric vehicles“.

Tesla seems trapped in its arrogance. Chinese manufacturers have an insanely fast product renewal capacity. The lifespan of a car is no longer 7 or 8 years as it is today. In China, a car lifespan is 2-3 years before it is replaced. Tesla cannot keep up with this frantic pace.

A too limited catalog?

The Cybertruck will be a purely American product. The Semi truck will not be exportable. The $25,000 car will arrive too late on the market, well after historical benchmarks like Renault, Peugeot, Volkswagen, and all Chinese brands. An MG4 is already offered for less than €23,000. Soon produced in Hungary, it will fall below €20,000 when factoring in ecological bonuses in France, among other places.

Tesla is searching for an escape route: to become a tech company whose visible part would be electric cars. But the real value of tomorrow will be energy and artificial intelligence. However, investors, tired of Elon Musk’s destructive media antics, are feeling uneasy.

There remains one thing: even at $183 per share, Tesla’s market capitalization still exceeds $574 billion. Last year at this same time, the stock had already fallen to $122 before rising back to $274 on June 30, 2023. Will history repeat itself? This time, there are fewer reasons for optimism, as the outlook darkens for Tesla.