Published on February 6th, 2024 | by Sounder Rajen0
Tesla Loses A Staggering USD94 Billion In Market Valuation In Just Two Weeks
It looks like Tesla is already facing major challenges early in the year
Well, this is certainly a surprise to me, as just earlier today, I had covered a story on how a Tesla driver rammed straight into a wall despite the car having all the fancy and modern safety systems needed in order to prevent just that. While writing that story, I expressed my concern over how no one held Tesla accountable, now it seems like that is finally changing.
So it has been reported that Tesla, the once upon a time best selling electric vehicle (EV) giant, that seemed untouchable at one point, now faces its toughest start to a year ever. The company lost over USD94 billion (about RM446 billion or RM446,923,000,000 specifically at the current exchange rates) in market valuation in just two weeks.
Moreover, challenges for the brand at the moment include an about-face from Hertz on EVs, price cuts for Chinese-made cars, and signs of rising labour costs as well. With all this weighing Tesla down so early into the year, will the EV maker be able to survive until the end of this year or will we finally see the brand go out of business for good?
Well, knowing Tesla CEO, Elon Musk, the brand will be just fine but this does come amid slowing growth in EV demand, particularly in the US and China. The brand’s market cap in the US also took a big hit, dropping 12 percent, the worst since 2016. This is very bad news for the brand as it means they will likely not see a profit this year in a bid to just stay alive.
On top of that, the aggressive price cuts to boost demand led to a steady erosion of profit margins as well as labour cost pressures escalated with Tesla US plant workers getting pay raises. This is another hit that, quite frankly, Tesla cannot afford to take, so the brand really has to buck up and fast, if it hopes to see any profit at all by the end of the year.
Shipments to the Tesla Berlin plant are also rerouted due to security concerns and investors are worried about stagnating growth and intense competition in the EV industry. The brand’s recent struggles challenge its past success, while CEO Elon Musk’s net worth has already dropped by USD23 billion (roughly RM109 billion) this year. Can Tesla overcome these challenges? Let’s see.