Tesla’s electric vehicle sales have stalled, but Wall Street is largely unfazed, with investors placing their bets on the company’s progress in autonomous driving and CEO Elon Musk’s growing influence in Washington.
Despite a slight dip in its stock price on last Friday, Tesla shares have surged nearly 80 percent since early November. This surge has propelled Musk’s personal wealth to new heights, cementing his position as the world’s richest person. His $250 million investment supporting former President Donald Trump’s campaign and his close ties to the incoming administration have sparked speculation that Musk could leverage his influence to benefit Tesla.
However, stagnant sales pose a significant challenge for Tesla, especially as the global electric vehicle (EV) market is expected to play a key role in combating climate change. While automakers like General Motors and Hyundai expand their EV offerings, Tesla still dominates the U.S. market, accounting for nearly half of all electric vehicle sales and shaping the direction of industry innovation.
Musk has been vocal about a range of issues on X (formerly Twitter), from government spending and immigration to his controversial views on the “woke mind virus” and threats to humanity. Yet, he has been noticeably silent about Tesla’s sales struggles and plans to reignite demand. Details about Tesla’s much-anticipated budget car, which may debut at a starting price of $25,000 by mid-2025, have been scarce. The new model is seen as a critical move to bring electric vehicles within reach of the middle class.
Tesla did not respond to requests for comment on its current strategy.
Investors Question Musk’s Commitment to Tesla Amid Expanding Ventures
Some analysts are questioning whether Musk’s attention is divided among his various business ventures. In addition to Tesla, Musk is deeply involved in X, SpaceX, and his new role as co-head of a government efficiency department tasked with advising Trump on slashing federal spending.
Kenneth Boyer, a business professor at Ohio State University, pointed out that Musk’s dedication to Tesla during the company’s production struggles in 2018, when he famously slept at the factory to meet the Model 3 production targets, was unparalleled. “He was all in,” Boyer said. “The question now is whether he is spread too thin.”
Tesla’s upcoming sales figures for the final quarter of 2024 will reveal the extent of its ongoing struggles. Early data suggests that Tesla’s sales have fallen in all of its major markets, with a projected 6 percent decline in U.S. sales for 2024. According to Cox Automotive, this decline is among the largest for any carmaker, second only to Stellantis. Tesla’s share of the U.S. car market is expected to end the year at just 4 percent, with a total of 633,000 vehicles sold.
In the European Union, Tesla’s sales through November have dropped by 15 percent, while in China, the world’s largest car market, sales have also slipped. Despite these declines, the global EV market has grown by 25 percent this year, according to Rho Motion.
Can Tesla’s New Affordable EV Revive Sales?
Investors remain hopeful that the launch of a more affordable Tesla model could reverse the sales downturn. The Model 3, Tesla’s least expensive model, starts at $42,500 in the U.S. before incentives. A new $25,000 model would significantly lower the entry price for electric vehicles, making them accessible to a larger segment of buyers.
Ben Rose, president of Battle Road Research, believes a more affordable Tesla would open the market to a wider customer base, a prospect that has investors excited. “The idea of Tesla being able to reach more buyers with a cheaper car — that’s what people are most hopeful for,” Rose said. However, he acknowledged that this is the project Musk seems least enthusiastic about.
Despite investor optimism, Tesla has yet to reveal key details about the new vehicle, such as performance or even a prototype. This lack of transparency stands in contrast to the company’s Cybertruck, which was unveiled in 2019 and has already garnered a significant amount of attention. The Cybertruck, starting at $80,000, has not generated the volume of sales needed to offset Tesla’s overall decline. Through September, Tesla had sold just 28,000 units, far fewer than the Model Y, its most popular vehicle.
The Self-Driving Vision: Musk’s Long-Term Gamble
While Musk has focused on promoting Tesla’s self-driving technology, many investors are pinning their hopes on the future of autonomous vehicles and self-driving taxis. Although widespread use of self-driving taxis is still years away, some companies, like Waymo (a subsidiary of Google’s parent company), are already operating driverless rides in cities like San Francisco and Phoenix.
Tesla’s stock price has been buoyed by faith in Musk’s ability to deliver on his self-driving ambitions, with many investors believing that his connections in Washington could help clear regulatory hurdles. Despite this, experts agree that the path to a fully autonomous taxi fleet is still uncertain.
“The share price is very strongly tied to what people think of Elon Musk,” said Leonard Kostovetsky, a business professor at Baruch College. “Whether you think he’s a genius or just lucky.”
As Tesla grapples with stagnating sales, investors remain optimistic that Musk’s bold vision for the future will eventually pay off, even as the company faces growing competition in the electric vehicle market.
Related topic:
Bitget Launches CGPT/USDT Perpetual Futures with 75x Leverage
