On January 14, Beijing time, Tesla performed well in 2023, with its stock price more than doubling in 12 months. But entering 2024, Elon Musk's electric car company is off to its worst start ever.
In just the first two weeks (9 trading days) of this year, Tesla's stock price has evaporated by more than US$94 billion (approximately 668.4 billion yuan). This is the biggest decline in the company's market capitalization since it went public in 2010. Judging from the decline, Tesla's stock price has fallen 12% since the beginning of January this year, recording its worst performance since 2016. In the first nine trading days of 2016, Tesla’s stock price fell by 14%.
That comes as Tesla has been hit by a barrage of negative news, including car rental giant Hertz abandoning electric vehicles like Tesla, another price cut by Tesla in China and signs of rising labor costs. This all comes against a backdrop of slowing growth in demand for electric vehicles, especially in the United States.
"Investors' main concern about Tesla is stagnant growth." Jeffrey Osborne, an analyst at investment bank Cowen, said in an interview. He believes that Tesla's price cuts in the Chinese market will only exacerbate these concerns, because "given the fierce competition in the Chinese market, the electric vehicle industry seems to be embarking on a race to the bottom (to see who has the lowest price)."
Since the start of 2023, Tesla has been aggressively lowering vehicle prices to boost demand, causing its once-thick profit margins to steadily decline. Excluding zero-emission vehicle credits, Tesla's gross profit margin fell to 16.3% in the third quarter of 2023 from 27.9% a year ago. That pressure is only growing now that Tesla is giving production workers at its U.S. factories a raise.