2022 was, in a way, the year of Elon Musk. But If he made headlines for his $44 billion acquisition of Twitter at the end of October, the success of SpaceX’s astronautical launchers and Tesla’s sales boom, the brilliant and temperamental boss has suffered many disappointments. Tesla thus lost two-thirds of its stock market value in 2022, the victim of fears about the demand for electric cars, the end of easy money on Wall Street, but also the tribulations for the uncertain outcome of the social network.
For one thing, the multibillionaire sold several billion dollars worth of Tesla stock to fund the acquisition and then operating costs of his new toy, selling another $3.6 billion in early December. And this, while he had said in the spring that he had no intention of selling any more. Elon Musk also threw the social network into turmoil, laying off half of its employees. Suddenly, “Musk has lost all credibility with the investment community,” said Dan Ives, an analyst at Wedbush Securities. It has become “untenable” to value Tesla without taking into account Twitter’s erratic management, trumps Oppenheimer’s Colin Rusch.
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unusual promotions
Long at the top of the ranking of the greatest fortunes, Elon Musk suddenly abandoned the top spot in favor of Frenchman Bernard Arnault, head of LVMH. According to the Bloomberg Billionaires Index, Elon Musk has lost half of his fortune since January 2022, still retaining the tidy sum of $130 billion. This evaporation is mainly due to the drop in Tesla’s valuation. However, this was multiplied by twelve in two years (2020 and 2021), breaking the ceiling of 1,000 billion dollars.
However, Tesla, which has just promoted its de facto boss in China Tom Zhu number 2 behind Elon Musk, announced earlier this week the delivery of 1.31 million high-end electric vehicles in 2022. That’s an increase enviable 40% . The problem is that the Fremont brand remains below its own forecasts (+50%) and Wall Street’s expectations. To boost its sales at the end of the year, Tesla even had to offer unusual promotions. In an email sent to employees – and consulted by the CNBC channel – Elon Musk had asked them to volunteer to deliver as many cars as possible before the end of 2022.
Observers are concerned about a slowdown in sales growth. Over the past two years, demand has outstripped supply for electric cars, but that trend should “reverse” in 2023, according to Adam Jonas, an analyst at Morgan Stanley. “Between a deteriorating macroeconomic environment, unaffordable prices for many and growing competition, there are hurdles to be overcome,” he said. “There’s no question there’s a fear of demand,” said Thomas Hayes, chairman of Great Hill Capital.
very expensive cars
The brand no longer has a virtual monopoly on electricity in the United States. General Motors, Ford, Nissan, the Korean Hyundai-Kia, the Volkswagen group, got into it. And, at the top of the range, Mercedes-Benz, BMW, Audi (Volkswagen), Polestar (Volvo), give it strong competition. Tesla still largely dominates the electrical market in the United States with 65% market share (first nine months of 2022), but was 80% in 2020! Its penetration is expected to drop below 20% by 2025, predicts S&P Global. By this time, the American electric pie will, it is true, have grown considerably.
Several observers fear that the expensive Tesla (from 53,490 euros each in France up to 130,000) will suffer rivalry from cheaper electric models. “The big manufacturers will arrive with force in the same niche for less. And then, it will be difficult for Tesla”, anticipated two years ago Didier Leroy, then vice president of Toyota.
Worse, a Reuters poll shows that used Tesla’s transaction prices are falling faster than those of other manufacturers, which will also weigh on demand for new models.
Opening of the German factory
Tesla’s dynamism is nothing short of surprising. It is the manufacturer that grew the most in the world last year. The Californian company even recorded a 48% increase in sales in the United States last year. Another record broken: Tesla’s Shanghai factory delivered 710,000 vehicles in 2022 (+48% too). In 2020, Tesla surpassed the mark of 500,000 cars sold worldwide for the first time, approaching one million a year later.
After losing $4.5 billion between 2016 and 2019, the “high-tech” company managed in 2020 to finally generate a net profit. After the Shanghai site, Tesla opened the German factory in Grünheide, near Berlin, last March. We haven’t opened a new car factory in Western Europe since Toyota’s French factory in Valenciennes in… 2001!
At $339 billion, Tesla’s market capitalization, even in a steep decline, remains first in the automotive world, and by far. It is ahead of Toyota (210 billion euros), Volkswagen (74), Mercedes (70.5), BMW (58.5), GM and Ford (49 billion dollars each), Stellantis (45 billion euros). Tesla’s valuation is thirty times higher than Renault’s.