Why Tesla Stock Is Plummeting in 2024?

Once hailed as an unstoppable force in the motor trade sector, Tesla is now facing some turbulent times, grappling with challenges ranging from broader economic shifts to internal leadership issues.

The year started with Tesla igniting an electric vehicle (EV) price war in China, triggering a domino effect reverberating through Chinese EV motor manufacturing companies like NIO, Xpeng Motors, and Li Auto.

However, Tesla’s woes didn’t stop there. The market responded unfavourably to its Quarter 4 earnings, particularly to management’s cautionary statements regarding 2024 deliveries, hinting at a potential shortfall compared to previous growth rates. This departure from the touted delivery Compound Annual Growth Rate (CAGR) of 50% further rattled investors.

Motor trade companies still speculate about when they can put Tesla’s highly anticipated Cybertruck on trade plates. However, with it still in the pipeline halting growth and a challenging macroeconomic environment, particularly in China, its largest overseas market, the sentiment towards EV stocks has soured.

Declining vehicle sales have marred Tesla’s journey from an innovative tech disruptor to a mass-market car maker.

The company’s response to these challenges has been multi-faceted. It has slashed prices, restructured its workforce, and streamlined operations to weather the storm. However, Tesla’s evolution from a pioneering startup to an industry incumbent has presented new hurdles. As competitors catch up, Tesla finds itself navigating uncharted waters, no longer enjoying the novelty and power it once possessed.

Professor Peter Wells of Cardiff University’s Centre for Motor Trade Industry Research points out that Tesla’s novelty has worn off, and it now grapples with the complexities of being an established player in a fiercely competitive market.

Moreover, the EV landscape has evolved significantly, with traditional manufacturers like Volkswagen investing heavily in electric vehicles following the diesel emissions scandal.

UK Government subsidies, once instrumental in driving EV adoption, have been curtailed in many regions, impacting sales growth.

Tesla’s pursuit of full autonomy, championed by CEO Elon Musk, has yet to materialise as promised, further fuelling scepticism among critics. While Tesla continues to position itself as a technology leader, doubts linger about the feasibility of its ambitious plans.

In response to market pressures, Tesla has resorted to price reductions and cost-cutting measures similar to those of traditional motor vehicle manufacturers. However, whether these tactics will suffice to reverse its fortunes remains uncertain.

As Tesla navigates this challenging terrain, its ability to adapt and innovate will be crucial in determining its future trajectory. Only time will tell whether it can regain its former glory amidst an increasingly crowded and competitive EV landscape.