Tesla gets a $94-billion reality check as EV winter sets in

financialpost.com:

Tesla Inc. had a blockbuster 2023, as its shares more than doubled in 12 months, but 2024 is starting on a different note, with Elon Musk’s electric-vehicle maker off to its worst start to any year — ever.

The company has lost more than US$94 billion in market valuation in just the first two weeks of 2024. It’s not hard to figure out why, as the Austin, Tex.-based EV maker has been pounded by a barrage of negative news: an about-face on EVs from car rental giant Hertz Global Holdings Inc., yet another price cut for its cars made in China and signs of rising labor costs.

All this comes in the face of slowing growth in demand for EVs, especially in the United States.

“Investors’ main concern on Tesla is stagnating growth,” TD Cowen analyst Jeffrey Osborne said. The price cuts in China only fan those concerns, because it is starting to look like “a race to the bottom for the EV industry given intense competition in that market.”

The hit to Tesla’s market capitalization to start the year is the biggest the company has had over a similar period since it went public in 2010. In percentage terms, Tesla’s 12 per cent drop since the start of January is the worst since 2016, when the stock fell 14 per cent over the first nine trading days of the year.

To make matters worse, the odds of an imminent turnaround for the EV maker don’t look good.

Tesla has been cutting prices on its cars aggressively since early 2023 in an effort to boost demand. But the result has been a steady erosion of its once-hefty profit margin. Tesla’s automotive gross margin ex-regulatory credits for the third quarter fell to 16.3 per cent from 27.9 per cent a year ago. And the pressure is only mounting now that production workers at Tesla’s U.S. plants are