Elon Musk's 'sales warning' brings $80 billion 'bad news' for Tesla

9 months ago 20

Elon Musk-led

Tesla

announced price cuts for its electric vehicles in one of its most important markets, China, earlier this month. Despite announcing the price cuts, the company’s CEO recently warned that sales growth would be slow in 2024. The new prices have already started hurting the margins of the world's most valuable automaker and are also fueling concerns among investors about slowing demand and Chinese competition.
According to a report by the news agency Reuters, the billionaire’s sales warning has affected the company’s market value which has gone down by 12%.

The report claims that this was Tesla’s sharpest intraday loss in more than a year. $80 billion was wiped out from the company’s market value in a day.
Musk

recently said that Tesla’s growth would be "notably lower" as the company is focusing on a cheaper, next-generation electric vehicle. This car is expected to be made at the company’s Texas factory in the second half of 2025. This model is likely to drive the next boom in deliveries.

What analysts said about Tesla’s growth in China

TD Cowen analysts said, “Tesla headlines have essentially gone from bad to worse,” the report adds. The analysts also noted that the fourth-quarter revenue and profit were also below expectations.

Michael Hewson

, chief market analyst at CMC Markets said: “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.”
The EV industry has been struggling with a slowdown in demand for more than a year. The price cuts announced by Tesla may even affect startups and other automakers such as Ford.

Apart from Tesla, the shares of other EV makers have also dropped. As per the report,

Rivian Automotive

as well as Lucid Group and Fisker’s share prices were also down between 4.7% and 8.8%.
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