[Asia Economy Reporter Yujin Cho] Tesla's stock, which plunged sharply from the first trading day of the new year, managed to rebound within a day, but market expectations are lowering. Due to a series of negative factors such as the shock in delivery volume and intensified competition in new car launches, it is anticipated that the stock price will not escape the downward trend this year, following last year.
On the 4th (local time) in the US Nasdaq market, Tesla's stock closed with a rise of over 5% as a rebound buying wave flowed in after the previous day's sharp drop. On that day, Tesla's stock closed at $113.64, up 5.12% from the previous session. Tesla's stock, which plunged over 12% the day before, lost $47 billion (about 60 trillion KRW) in market capitalization in a single day. This amount is comparable to the entire market capitalization of US automaker Ford, which stood at $48 billion as of the close on the 4th.
Tesla, the leading automobile stock and a symbol of growth stocks, fell nearly 70% last year. At the beginning of last year, Tesla's stock price hovered around $400, but as its core electric vehicle business faltered and the forced acquisition of Twitter highlighted 'owner risk,' market trust rapidly declined, and by the close on the 30th of last month, it had fallen to $123.18. Despite unprecedented recession conditions caused by semiconductor chip shortages and supply chain disruptions following the COVID-19 aftermath, Tesla, which had enjoyed record growth, repeatedly fell and earned the stigma of being the company with the worst stock price decline in history.
At the DealBook Conference hosted by The New York Times (NYT), Matthias Schmidt, a German automotive market analyst, stated, "Electric vehicle companies including Tesla will face a tough market competition this year," and presented four reasons why Tesla's stock price is likely to fall further this year. Following last year, ongoing interest rate hikes and economic recession in various countries have begun to cause overall cracks in vehicle demand. As governments such as the Federal Reserve (Fed) and the European Central Bank (ECB) continue aggressive benchmark interest rate hikes this year, automobile loan rates are rising, which is expected to negatively impact electric vehicle demand.
Meanwhile, the launch of new models by competitors such as Ford Mustang Mach-E and Volkswagen ID3 is lined up, intensifying competition. In Tesla's home market, the US, Ford, General Motors (GM), and Hyundai are rapidly eroding Tesla's market share, and with GM's luxury brand Cadillac and Nissan joining in, Tesla's efforts to maintain its market position are becoming increasingly difficult.
The plan for new car launches that could reverse this market situation is unclear. Tesla has not released a new model since the Model Y in 2020. The production schedule for the upcoming electric pickup truck, the Cybertruck, has been delayed multiple times, pushing its release to the end of the year. The delay is attributed to major changes in key performance features amid fierce competition in the electric pickup truck market, causing significant confusion.
In key growth regions such as China and Japan, where the company is focusing, Tesla's competitiveness has reached its limits as local companies receive government support. Chinese domestic electric vehicle manufacturer BYD, backed by government support, already pushed Tesla out last year and is expected to widen the gap further this year to solidify its number one position. According to the China Passenger Car Association (CPCA), Tesla's sales in China increased by 59% year-on-year last year, while BYD's surged by 200%. The NYT evaluated that "Tesla is facing serious challenges as it is being pushed out by local domestic companies in its largest market, China."
The situation in Europe, the world's second-largest market after China, is even more severe. Tesla's market share in Europe fell from 33% in 2019 to about 15% last year. Schmidt pointed out that the situation this year is unlikely to improve as major European countries such as the UK, Germany, and Sweden are reducing incentive policies for electric vehicles.
Wall Street is also pessimistic. Tesla's vehicle deliveries last year reached 1.31 million units, a 40% increase from the previous year but fell short of the target (50%). Deliveries in the fourth quarter of last year (405,278 units) also missed Wall Street's estimate (431,117 units). Seth Goldstein, an analyst at financial information firm Morningstar, said, "Tesla has entered a phase of growth slowdown and will be more severely impacted by the economic recession."
Following the announcement that Tesla's electric vehicle deliveries fell short of Wall Street expectations, at least four Wall Street investment firms lowered their target prices and future earnings estimates. JP Morgan lowered its target price to $125, anticipating a reduction in Tesla's margins. Goldman Sachs predicted further stock price declines, stating that Tesla failed to meet sales targets despite heavy discounts to clear inventory, and Morgan Stanley forecasted that Tesla's operating profit this year would decrease compared to the previous year.
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