The discovery that drives investors away from Tesla

After the market capitalization of Tesla surpassed that of Toyota, then the world’s most valuable car company, in the summer of 2020, devoted fans and disbelieving skeptics used a new unit of measurement. As shares of the electric vehicle champion rose, their value was expressed in terms of the combined value of the next two, then five, then ten largest automakers. A year ago, Tesla’s market value was more than $1.2 trillion, more than most car companies combined. Since then, he has lost 71% of that figure, an amount that exceeds the value of most of the industry. As a result, the fortune of the fickle boss of him, Elon Muskhas been reduced by more than 200,000 million dollars.

The latest blow came on January 3, after Tesla missed analysts’ delivery expectations for the third straight quarter and reported that the gap between production and deliveries had widened, suggesting lower demand for its vehicles. electrical. In one day it lost 12% of its value, about 50,000 million dollars, or what is the same, a Ford Motor Company. Even the most optimistic investors now doubt that Musk will deliver on his promise to make 20 million cars a year by 2030, or that Tesla’s Autopilot is close to becoming a world-changing fully autonomous driving system. However, the main reason the market has recalibrated Tesla’s outlook is that it is realizing that the company is primarily a car manufacturer and that your boss is not a Superman.

Musk has always viewed his company as a tech firm, on a par with digital giants like Alphabet, Apple and Meta, rather than old-economy metal giants like Toyota or Volkswagen. For a while, so did the market, first as tech stocks soared amid the pandemic-era boom of all things digital, and then when they slumped last year after their growth began to slow and rates higher interest rates would make their promised future benefits seem less valuable today.

In recent months, however, Tesla’s price has suffered a sharper correction than that of the big technology companies. This has coincided with its more mundane travails as a car company. Having managed to avoid the worst of supply chain disruptions from the pandemic, Tesla has found itself caught up in China’s chaotic withdrawal from the “zero virus” policy; its large Shanghai factory has been hit by virus-related shutdowns. And having set the course for the industry’s transition, it now faces fierce competition from established rivals and a host of newcomers it inspired. Days after Tesla released its disappointing numbers, Volkswagen unveiled its id.7, a contender for Tesla’s entry-level Model 3 sedan.

EV buyers, for their part, are increasingly less willing than the former to overlook Tesla’s questionable build quality and the interior of a much cheaper car. And Tesla’s natural owners among wealthy progressives are less willing to overlook the libertarian Twitter antics of the Musk, whom he bought in October and has gladly mismanaged, especially now that they have plenty of conscience-saving alternatives including to choose.

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