Tesla shares fall 8%, set to erase $50 billion in valuation after CEO Elon Musk warns sales growth
BENGALURU : Tesla tumbled more than 8% on Thursday after CEO Elon Musk warned sales growth would slow this year despite price cuts that have already hurt margins and raised investor concerns at the world's most valuable automaker. Musk said growth would be "notably lower" as Tesla focuses on a cheaper, next-generation electric vehicle to be made at its Texas factory in the second half of 2025, which is expected to spark the next boom in deliveries. But his remarks fell flat with investors, with Tesla set to lose more than $50 billion in market value, if premarket loss hold.
Its stock was already down 16.4% this month, as of the last close. "The Tesla headlines have essentially gone from bad to worse," said TD Cowen analysts, noting that the fourth-quarter revenue and profit were also below expectations. Shares of other EV makers also fell, with Rivian Automotive Inc, Lucid Group and Fisker down between 1.2% and 2.4%.
The EV industry has been grappling with a slowdown in demand for more than a year and the price cuts by Tesla will likely worsen the pressure on the startups and automakers such as Ford. "The problem for Tesla is any significant attempt to boost sales from here on will probably need to be achieved at the cost of further falls in operating margin, due to having to compete with BYD in China, as well as increased competition elsewhere," said Michael Hewson, chief market analyst at CMC Markets. At least, nine brokerages downgraded the stock, while seven raised their ratings.
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