'Tesla Kingdom' Beyond 'Gwonbulshipnyeon'... Despite Consecutive Setbacks, "Still an Expensive Stock"

[Global Focus] Growing Crisis Rumors Surround Tesla

[Asia Economy Reporter Yujin Cho] 'From the largest ever to the worst ever.' Tesla, the game-changing kingdom that started as an electric vehicle startup in 2003 and shook the global automotive industry, is collapsing in less than a decade. Despite unprecedented recessions such as semiconductor chip shortages and supply chain disruptions during the COVID-19 pandemic, Tesla, which enjoyed 'the largest ever' growth, has repeatedly fallen this year and is expected to be recorded as a company with 'the worst ever' stock price decline in history. As the market's fandom for Tesla rapidly cools, its valuation, which once soared well beyond $1 trillion, has shrunk to less than half. With poor core business performance compounded by Elon Musk's 'owner risk,' Tesla's future faces a dire crisis.

Tesla Crisis Theory... Why?

The New York Times (NYT) questioned on the front page of its international edition on the 22nd (local time) whether Tesla can continue to maintain its dominance in the global electric vehicle market. The article pointed out that Tesla has reached fundamental competitive limits beyond the owner risk triggered by Musk's Twitter acquisition.

The crisis is most evident in China, Tesla's single largest market. According to the China Passenger Car Association (CPCA), Tesla's sales in China this year (as of the end of last month) increased by 59% compared to the same period last year. Although this seems like high growth, Tesla's biggest competitor, the domestic electric vehicle company BYD, jumped by a staggering threefold. Having overtaken Tesla last year to claim the top spot, BYD has widened the gap with the second place this year. Due to sluggish sales and accumulating inventory, Tesla's Shanghai factory has cut production by 20%. Tesla, known as the symbol of 'no discounts,' even ran promotions in October to reduce prices of Model 3 and Model Y in China by 5-9%. However, the results were disappointing. The NYT evaluated that "Tesla is facing serious challenges as it is being outpaced by local domestic companies in its largest market, China."

The situation in Europe and the United States is even more severe. Tesla is at risk of losing its market leadership in the European electric vehicle market to Volkswagen, which is rapidly expanding its presence. According to EU-EVs, a European electric vehicle statistics site, Volkswagen's market share in Europe for Q3 this year was 16.48%, nearly surpassing Tesla's 16.94%. During the same period, Hyundai Motor had 7.15%, Audi 5.54%, BMW 5.47%, and Mercedes-Benz 5.15%, narrowing the gap and competing for 3rd to 6th places. In the U.S., Ford, General Motors (GM), and Hyundai are rapidly eroding Tesla's market share, and with GM's luxury brand Cadillac and Nissan joining next year with new car launches, Tesla's ability to maintain its market share is expected to become even more difficult. Anticipating sluggish sales, Tesla expanded discounts on Model 3 and Model Y by up to double until the 31st to clear inventory. However, CNBC, a U.S. economic media outlet, analyzed this as "a clear sign that consumer demand for Tesla's popular models is weakening."

Tesla's new car strategy, which was the driving force behind its high growth, has also reached its limits. Since launching Model 3 in 2016 and Model Y in 2020, Tesla has not released any new models. The electric pickup truck 'Cybertruck' in preparation has had its production schedule delayed multiple times, pushing the launch to the end of next year. Compared to the initial launch schedule announced in 2019 when Tesla first revealed the Cybertruck to the media (2021), it is more than two years late. As competition in the electric pickup truck market intensifies, Tesla has undergone major changes to the key features of the new product, causing significant confusion, which is cited as the main reason for the delay. Foreign media have noted that Tesla's Cybertruck will be launched later than competing models from Ford, Rivian, and GM, signaling that Tesla is falling far behind in the industry race to release new vehicles.

'De-Tesla' Movement Spreading in the Origin Country

In Germany, the birthplace of the automotive industry, resentment toward Musk is rapidly spreading into a 'de-Tesla' movement. Musk's suspension of Twitter accounts critical of him has been harshly criticized as 'media suppression,' leading to a boycott-like situation. According to a survey conducted by German market research firm Polis in the first week of this month targeting 1,010 people, about half of the respondents said, "The Twitter acquisition negatively affected Tesla's image," and "I will not purchase a Tesla vehicle in the future." This de-Tesla movement has also impacted demand. At Tesla's production plant in Berlin, Germany, production last week (12th to 18th) was 3,000 units, far below the initially set target.

Stock Price Returns to Two Years Ago... Tesla Regresses

Tesla's soaring stock price has sharply declined this year, returning to levels from two years ago. On the 25th, Tesla's stock price listed on the U.S. Nasdaq market closed at $123.15, down 1.76% from the previous session, marking six consecutive days of decline. Since the end of October, the stock price plunge has accelerated, dropping by more than half in two months. The market capitalization, which once exceeded $1 trillion, has shrunk to $388.9 billion. Wall Street analysts say, "Tesla's sharp stock price decline signals that investors no longer believe Musk's pledge to achieve annual sales of 20 million units by 2030."

Musk's focus on the Twitter acquisition, which he admitted he bought at a high price, also fuels the stock price plunge. Following the Twitter acquisition, concerns about Musk's divided attention and massive sales of Tesla shares have caused Tesla's brand value to decline in real time. Investors cite Musk's ongoing political statements, aggressive restructuring after acquiring Twitter, and impulsive and autocratic management style as the biggest risk factors driving the stock price down. Axel Schmidt, Senior Managing Director at consulting firm Accenture, criticized Musk's 'side activities' after the Twitter acquisition, saying, "The CEO position of Tesla is not a 'part-time job.'"

"It Will Fall Further Next Year"... Wall Street Bets on Additional Declines

Tesla's stock price decline is expected to continue next year amid various negative factors. There is ongoing evaluation that Tesla's valuation is too high compared to its actual value. Global investment bank Goldman Sachs recently lowered Tesla's target stock price from $305 to $235.

Andrew Left, founder of Citron Research, said, "Tesla is still an expensive stock. The decline is not over yet," predicting further drops. According to financial information provider FactSet, Tesla's price-to-earnings ratio (P/E) over the past 12 months was 46.7 times, significantly down from 1,196 times in April last year but still far exceeding the S&P 500 average of 18.1 times.

This content was produced with the assistance of AI translation services.