Elon Musk’s Tesla loses $94 billion in market valuation as global EV market slows down

Tech Elon Musk’s Tesla loses $94 billion in market valuation as global EV market slows down Along with Tesla, Elon Musk too lost a big chunk of his wealth. As per Bloomberg’s Billionaire index, Musk lost over $23 billion personally. Tesla is struggling for a number reason, including the ongoing fiasco at the Red Sea FP Staff January 15, 2024 13:04:58 IST Along with Tesla, Elon Musk too lost a big chunk of his wealth.

As per Bloomberg’s Billionaire index, Musk lost over $23 billion personally. Tesla is struggling for a number reason, including the ongoing fiasco at the Red Sea Tesla, after a stellar 2023 where its shares more than doubled, is facing a rocky start to 2024, marking its worst beginning to any year in its history.

The electric vehicle (EV) manufacturer has witnessed a staggering loss of over $94 billion in market valuation within the first two weeks of the year, as per a report by the South China Morning Post. Several negative developments, including a reversal on EVs by car rental giant Hertz Global Holdings, continuous price reductions for its China made cars, and indications of escalating labor costs, have contributed to this decline.

The challenges come against the backdrop of a slowdown in the growth of EV demand, particularly in the United States. Furthermore the ongoing fiasco at the Red Sea is also causing major trouble for Tesla’s shipping channels. Related Articles Setback for Tesla in China, Elon Musk’s EV company recalls 1.6 million cars due to faulty Autopilot, steering Tesla to rethink strategy, broaden appeal after record sales in 2023, go beyond EV enthusiasts The SCMP report quotes analysts, who point to investors’ primary concern being Tesla’s stagnant growth, exacerbated by price cuts in China, which appear to signal a “race to the bottom” in the fiercely competitive EV market.

Tesla’s market capitalization has taken its biggest hit since going public in 2010, with a 12% drop since the start of January, the largest in percentage terms since 2016. The company has been aggressively reducing car prices since early 2023 to stimulate demand, resulting in a significant erosion of its profit margins.

The pressure intensifies as production workers at Tesla’s U.S. plants receive pay raises. The challenging scenario is compounded by the redirection of shipments intended for Tesla’s Berlin plant due to geopolitical concerns in the Red Sea, leading to the suspension of most production at its German facility.

This comes at a time when Tesla is already grappling with the impact of a global deceleration in EV demand, a phenomenon first highlighted in its October third quarter earnings report. Despite Tesla’s recent fourth quarter delivery numbers surpassing expectations, the company trails behind China’s BYD Co in global electric car sales, contributing to a stark contrast in its stock performance.

In 2023, Tesla ranked as the eighth best performer in the S&P 500, while in 2024, it currently stands as the eighth worst. The financial downturn is hitting Elon Musk personally, with a $23 billion reduction in his net worth this year. Musk, who became the world’s richest person last year, faces competition from Amazon.com founder Jeff Bezos, who is rapidly closing the gap in net worth.

While Tesla faces substantial challenges, it remains a key player in the global transition to electric vehicles, given its significant lead over potential competitors. Despite China’s BYD surpassing Tesla in unit sales, Tesla maintains its market leadership in the U.S., contributing to its ongoing importance in the industry.

However, Tesla’s past success and the high expectations it generated may be contributing to its current market struggles, with the company’s valuation vulnerable to negative news amid intense competition and a shifting landscape in the EV market. Join our Whatsapp channel to get the latest global news updates Published on: January 15, 2024 12:56:13 IST TAGS: Elon Musk Tesla Tesla Market Value.