Elon Musk, Tesla and the last chance sale

Minus 20% or gains of 13,500 dollars depending on the model and the case: when Elon Musk decides to launch the Tesla sales period, he does not do things by halves, and throws a hell of a stone into the pool of competition that is tough. to follow.

A sign that the brand is doing well? Not really, and rather the opposite, quite logically analyzes Business Insider, describing Musk as “back to the wall”. And clouds have, in fact, been piling up for months on the once endlessly rosy future of the world leader in electric cars.

This won’t save anyone: Tesla is in a very bad position in the stock market and has gone through a more violent turmoil in 2022 than other tech companies, which have also been battered. The manufacturer, whose value once exceeded 1,000 billion dollars, saw its share price drop by almost 65% in a few months.

It was a terrible fall that the time Musk spent on Twitter, his new toy, was slightly favored, which provoked the logical anger of the brand’s shareholders, who were not happy to see his boss focused on other goals .

The biggest concern is about demand: for a builder whose waiting lists were once full, they are now starting to seriously crumble. This is particularly the case in China: as the New York Times explained, Tesla now faces tough competition there, especially the very dynamic BYD, and has seen its sales plummet in recent months.

In December and despite the promotions that caused some serious disturbances, Tesla sold 56,000 new cars in the Middle Kingdom, down 21% compared to the same month in 2021, and 44% compared to November: if the country remains very inclined among Musk’s cars, the tendency is to cause some consternation.

Second hand, second chance

Another sign has not fooled observers in recent months. After a long, crazy period of scarcity where the price of second-hand cars could sometimes cost more than the same new models, the trend has completely reversed.

Tesla’s used “bubble” has thus burst, to use the words of Reuters, raising fears for the demand for new cars, and no doubt fueling Musk’s decision to continue their drastic cuts in price.

It can also be explained by concern about interest rates, which continue to rise to fight inflation, a movement that Musk has been at odds with for months.

According to him, the Fed’s tightening, which increases the cost and complicates the financing of acquiring a new car, risks pushing the United States into a serious recession – even a major financial crisisthe loans to pay off are unbearable for the people who have already contracted them.

The competition, builders with very strong backs, are also adjusting their weapons in other parts of the world, so Tesla had to try everything to catch up with its rivals. Problem: people who have recently invested in one of the manufacturer’s vehicles feel deeply betrayed, especially since the resale value of their acquisition has suffered a sudden and brutal discount.

In addition, the company’s short-term profits will, logically, suffer from these massive balances. While Tesla has struggled with recent results that have been deemed disappointing, its earnings could drop by 25% in the coming months.

The bet is that this is only temporary, and the boosted demand will allow the brand to reverse its worrying trend of erosion.

Global demand for electric cars remains strong and growing, and Tesla still has a big lead over its once-struggling competitors—and its cars are suddenly becoming more competitive. Maybe it’s time for him, and to save his skin, to step on the anthill again.

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