Friday, January 26, 2024
By
Web Desk

Tesla stocks fall as sales decrease due to competition

Tesla has warned of a slowdown, which it believes is a reflection of the declining demand for electric vehicles worldwide

By
Web Desk
Tesla CEO Elon Musk. — AFP/File
Tesla CEO Elon Musk. — AFP/File

Tesla's stock fell more than 12% on Thursday after the company announced that its sales growth this year will be slower than 2023, BBC reported.

This has reduced the stock market value of Tesla by almost $80 billion.

Despite lower prices, Elon Musk — chief executive officer (CEO) of Tesla Motors — stated that its sales growth "may be notably lower" in 2024.

The automotive company's quarterly results, released on Wednesday also fell short of Wall Street projections.

The corporation has been lowering pricing in important global areas, like China and Europe, to stay competitive against fierce competition from automakers and Chinese rivals like Build Your Dream (BYD).

The continued high cost of borrowing — a result of central banks all over the world maintaining high interest rates to fight inflation — has also reduced demand.

According to Tesla, price reductions, increased research and development expenses, and expenditures related to ramping up production of the new Cybertruck have all reduced its profit margin.

Furthermore, the firm said it was "between two major growth waves" and would begin producing a new, less expensive car in the second part of the following year.

In addition, Musk forewarned investors that if trade restrictions are not implemented, Chinese rivals "will pretty much demolish most other car companies in the world."

In the final three months of 2023, BYD surpassed Tesla to become the world's best-selling electric vehicle manufacturer, prompting him to advocate for trade restrictions in the fiercely competitive sector.

Following years of rapid expansion, Tesla has warned of a slowdown, which it believes is a reflection of the declining demand for electric vehicles worldwide.

As of right now, Tesla's stock has dropped by more than 25% in value this year.