Everything that impressed the king of electric cars

It’s been a very tough first quarter for Tesla shareholders and fans of the electric vehicle giant. As of Thursday, the last trading day of the first quarter, Tesla shares have fallen an impressive 29.3%, becoming the worst-hit company in the S&P 500. Meanwhile, the S&P 500 is up 10.2%, its best first quarter since 2019.

As for Tesla, a combination of poor forecasts, a tough sales environment in China and more drama from CEO Elon Musk has led the electric vehicle maker, which surpassed $750 billion in market capitalization at the beginning of the year, to $200 billion. There was a loss of more than Rs. 1 January.

This is how it all happened.

quarter start notice

The first quarter got off to a good start for Tesla, as the electric vehicle giant reported that deliveries reached a record 485,000 units in the fourth quarter, with total annual deliveries by 2023 also on track for 1.8 million.

But that may be extreme for Tesla, at least for now.

In its fourth-quarter earnings report released in late January, Tesla said that “vehicle volume growth rates may be significantly lower than the growth rate achieved in 2023,” indicating that it would grow by 2024 against Wall Street’s forecast of 2.19 million units. Will be less than expected. Tesla also saw a decline in its automotive profit margins after the steep price cuts.

Morgan Stanley’s Adam Jonas, one of Wall Street’s biggest Tesla bulls, was not impressed by the revised guidance and the lack of actual commentary given to explain it. “I still struggle to think of another company that has provided so little detail on the outlook for next year,” Jonas said in a note to investors. “Our team’s belief is that either (a) visibility is poor or (b) there are downside risks to the broader EV market outside of Tesla’s control”,

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Part of that forward guidance, at least in the long term, revolves around Tesla’s upcoming next-generation vehicle, which the company itself said would hurt growth. Although Tesla said it plans to bring the vehicle to market as soon as possible, with production scheduled for Giga Austin, Tesla revealed that the vehicle will only go into production in the second half of 2025.

Tesla has missed its own external deadlines in the past, for example the Cybertruck debuted in 2019 but only entered production in the fourth quarter of last year. Many are concerned that the next generation vehicle, which could potentially achieve huge growth and modest profits, is not coming soon.

Growing concerns in China

Tesla’s problems in China started almost immediately in the new year.

In early January, Tesla announced steep price cuts for its cheapest models in the country, with the Model 3 price falling by 5.9% and the Model Y price falling by 2.8%. This was a repeat of last year, when a price war broke out between Tesla and Chinese rivals like BYD, Li Auto and Xpeng, leaving even the Chinese government worried.

But the price cuts did not help in improving sales compared to last year. Tesla reported 60,365 vehicle shipments from its Giga Shanghai factory in February, according to the China Passenger Car Association. February shipments represent a 19% decline from a year earlier and the lowest total since December 2022.

The situation did not improve even in March. “While NEVs (new energy vehicles, such as electric vehicles and plug-in hybrids) in particular were up 39.6% year-on-year and 7.4% (week-on-week to March 17),” said Deutsche Bank’s Emmanuel Rosner. ” “Tesla is down 35% year over year and 8% week over week,” it said in a note to clients.

With sales apparently declining, Tesla reportedly decided that its overcrowded Giga Shanghai factory will produce fewer vehicles. Last week, sources told Bloomberg that Tesla had reduced production at the plant by making employees work five days instead of the usual six and a half days.

Musk threatens Tesla for higher wages and control

If poor guidance, lack of clarity, and issues in China weren’t enough, CEO Elon Musk’s antics during the quarter didn’t help.

An example of this were Musk’s comments about artificial intelligence. Musk warned in mid-January that he would need to secure greater control over Tesla if the company’s artificial intelligence ambitions were to be realized.

Musk told his In case, I would prefer to make products outside of Tesla.”

Tesla shares fell after those comments, with investors worried that Musk might spin off Tesla’s AI unit into a separate entity. Additionally, Musk was basically demanding a royal ransom to keep AI operations in place.

Part of this demand for more shares is the ongoing litigation surrounding Musk’s current $56 billion compensation package, which was awarded by Tesla’s board in 2018. The CEO’s compensation package, which covered 10 years, gave him a stock grant of about 1% of Tesla’s stake each time. Essentially Tesla’s market value increased by $50 billion each time the company achieved one of the 12 milestones.

In late January, a Delaware judge invalidated Musk’s compensation package, finding that Tesla’s directors breached their fiduciary duty by giving Musk the largest compensation ever given to a public company executive. Was.

“Investors in Tesla need to consider whether Tesla’s board can meet its fiduciary responsibilities if it is acting in the overall interest of shareholders,” said William Klepper, a corporate governance expert and assistant professor at Columbia’s Tesla Business School. Grateful to the CEO.”

Tesla investors will be keeping an eye on next week’s first-quarter delivery report, hoping a positive surprise could shake up a miserable quarter.

written article originally in english By Prasad Subramaniam, Yahoo Finance reporter. you can follow this Twitter and in Instagram,

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