Tesla, the world’s leading electric vehicle (EV) maker, saw its stock price drop by 12% on Thursday, wiping out $80 billion in market value. The company reported disappointing fourth-quarter earnings and warned that its vehicle production growth rate may be significantly lower than the previous year. Tesla also faces increasing challenges from rivals in China and other markets, as well as regulatory hurdles and supply chain issues.
Tesla reported revenue of $25.17 billion for the fourth quarter of 2023, missing analysts’ expectations of $25.87 billion. The company also posted adjusted earnings per share of $0.71, below the consensus estimate of $0.73. Tesla’s revenue grew by only 3% year-over-year, compared to 28% in the third quarter and 46% in the second quarter. Tesla’s gross margin, a key measure of profitability, also declined to 17.6% from 18.1% in the previous quarter and 19.2% a year ago.
The company attributed the lower revenue and margin to several factors, including price reductions, product mix changes, increased operating expenses, and currency fluctuations. Tesla also faced headwinds from the global chip shortage, which affected its production and delivery of vehicles. Tesla delivered 1.8 million vehicles in 2023, up 48% from 2022, but below its target of 2 million.
Tesla also issued a cautious outlook for 2024, saying that its vehicle production growth rate may be “notably lower” than the 48% achieved in 2023. The company said that it is working on launching its next-generation vehicle at its Gigafactory in Texas, which is expected to start production in the second half of 2025. Tesla did not provide a specific guidance for 2024, but analysts expect the company to deliver around 2.2 million vehicles, representing a 21% increase from 2023.
Tesla Faces Rising Competition and Regulatory Challenges
Tesla’s stock plunge also reflects the growing competition and regulatory challenges that the company faces in the EV market. Tesla’s market share in China, its second-largest market after the U.S., has been declining as local rivals such as Nio, Xpeng, and Li Auto offer cheaper and more advanced models. Tesla also faces competition from legacy automakers such as Volkswagen, Toyota, and Ford, which are ramping up their EV offerings and investing heavily in battery technology.
Tesla also faces regulatory hurdles in several markets, including the U.S., Europe, and India, where it is seeking to expand its presence. Tesla has been under scrutiny for its Autopilot system, which has been involved in several accidents and fatalities. The company has also been accused of misleading consumers about the capabilities and safety of its self-driving technology. Tesla has also faced resistance from labor unions, environmental groups, and local authorities over its plans to build factories and sell vehicles in certain regions.
Tesla’s CEO Elon Musk, who is known for his visionary and unconventional leadership style, has also been a source of controversy and uncertainty for investors. Musk has been involved in several legal disputes, including a defamation case, a securities fraud case, and a tax evasion case. Musk has also been criticized for his erratic and unpredictable behavior on social media, where he often makes controversial and contradictory statements about Tesla and other topics. Musk has also announced his intention to sell most of his Tesla shares, raising questions about his commitment and confidence in the company.
Tesla Remains Confident in Its Long-Term Vision and Innovation
Despite the challenges and uncertainties, Tesla remains confident in its long-term vision and innovation. The company said that it is focused on bringing its next-generation platform to market as quickly as possible, which will revolutionize how vehicles are manufactured. The company also said that it is working on developing new products and services, such as the Cybertruck, the Semi, the Roadster, the Model 2, the Full Self-Driving software, the Tesla Network, and the Tesla Energy business.
Tesla also said that it is optimistic about the future of the EV industry, which is expected to grow rapidly in the coming years. The company said that it is well-positioned to capitalize on the increasing demand for sustainable and affordable transportation solutions. Tesla also said that it is committed to its mission of accelerating the transition to renewable energy and creating a positive impact on the world.
Tesla’s stock price may have taken a hit, but the company still has a loyal fan base and a strong brand reputation. Tesla also has a track record of overcoming challenges and proving its critics wrong. Tesla may face some bumps in the road ahead, but it is not giving up on its ambitious and innovative goals.
