(BFM Bourse) – The car manufacturer has lost 13.25% since January 1. The group was forced to halt production in Berlin due to tensions in its supply chain and to reduce prices in China and Germany.
Should the “magnificent seven” of Wall Street (Apple, Alphabet, Amazon, Meta, Microsoft, Nvidia and Tesla) be renamed the “fabulous five”?
Since the start of the year, the members of this group of technology stocks which alone carried or almost all of the performance of the S&P 500 last year, have experienced varying fortunes. Nvidia continues record after record, Alphabet and Meta have recorded small increases since January 1, and Meta is stable. Microsoft is also doing well, with an increase of 3.6%, which allowed it to overtake Apple as the world’s largest capitalization, the Apple group suffering in recent weeks, with a decline of more than 5%.
But there is much worse than Apple among this group of Wall Street megastars: Tesla. Since the start of the year, the electric vehicle specialist has fallen 13.25% as of Wednesday evening’s close. Over the whole of 2024 and based on data from Yahoo Finance, the automobile group has wiped out more than $100 billion (103.6 billion) in capitalization on the stock market, according to our calculations.
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A lost crown and price cuts
Tesla remains on a bad streak at the start of the year. The car manufacturer lost its title of leading manufacturer of battery electric vehicles, abandoning it to the Chinese BYD, with 494,000 units produced over the last three months of the year, compared to 519,000 for its competitor.
Certainly Tesla remains ahead throughout 2023, and this defeat remains above all symbolic. But it illustrates the great offensive of Chinese groups on the playground of the Californian group with an intensification of competition, first and foremost in China.
Tesla once again slashed its prices on its Model 3 and Model Y in the world’s second largest economy last week, in order to protect its volumes. “Tesla apparently hopes to maintain its market share in this highly competitive market,” Phate Zhang, founder of CnEVPost, a Shanghai-based electric vehicle data provider, told the South China Morning Post. “Chinese rivals have launched a series of new smart electric cars to compete with the American electric manufacturer,” he continued.
“The main concern investors have about Tesla is stagnant growth,” Jeffrey Osborne, an analyst at Cowen, told Bloomberg. “Price cuts in China only fuel these concerns, as it begins to look like a ‘race to the bottom’ for the electric vehicle industry, given the intense competition in that market,” he said. he adds.
Tesla has also decided to make price cuts this week on the Model Y in Europe, particularly in Germany and France, while the Old Continent has been the scene, for a little over a year, of a major offensive by Chinese manufacturers in the electric sector.
Bad waves from Hertz
Apart from the price cuts, the about-face of the rental company Hertz also sent the wrong signal. The group has decided to resell a third of its electric fleet, noting weak demand and high repair costs for this technology, to reinvest in cars with thermal engines. This represents a significant U-turn for Hertz, which decided in 2021 to purchase no less than 100,000 Teslas.
To make matters worse, Tesla was forced to suspend a large part of its production at its site in Berlin, Germany, reported Reuters, the fault of supply difficulties in certain components themselves due to attacks by the Yemeni Houthis in the Red Sea.
On Tuesday, Elon Musk also put a little pressure back on by threatening to house in a separate company the future artificial intelligence and robotics technologies from which Tesla must benefit in the future, if he does not own 25% of the rights vote of the manufacturer (currently its participation is around 13%).
“If Musk ultimately embarks on the path of creating his own company (separate from Tesla) for his next-generation AI projects, it would clearly be a big negative point for Tesla’s stock market history,” warned Dan Ives, Wedbush analyst, in light of this announcement.
Several analysts have lowered their price targets on Tesla in recent days, including UBS and Wells Fargo. Quoted by MarketWatch, Wells Fargo also fears that the growth of Tesla’s deliveries will suffer a serious slowdown this year, with an increase of only 13%, when the company has set itself the objective of an average increase of 50% per year. year.
The US bank warns that the automaker faces “growing pains”, with high interest rates penalizing the financing of car purchases and adoption of electric vehicles stabilizing.
Julien Marion – ©2024 BFM Bourse
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