2022 was somewhat of an Elon Musk year. But If he made headlines for the $44 billion takeover of Twitter at the end of October, the success of SpaceX’s space launch vehicles, and Tesla’s sales boom, the brilliant and temperamental boss has suffered plenty of disappointments. Thus, Tesla lost two-thirds of its market value in 2022, falling prey to concerns about demand for electric vehicles, the end of easy money on Wall Street, as well as adversity due to the social network’s uncertain outcome.
On the one hand, the multibillionaire sold several billion dollars worth of Tesla shares to finance the acquisition and later operating expenses of his new toy, selling another $3.6 billion in early December. And this despite the fact that in the spring he said that he was not going to sell anymore. Elon Musk also threw the social network into disarray by firing half of its employees. All of a sudden, “Musk lost all credibility from the investment community,” said Dan Ives, an analyst at Wedbush Securities. It has become “impossible” to rate Tesla without taking into account the erratic management of Twitter, surpassing Oppenheimer’s Colin Rush.
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Fancy Promotions
Elon Musk, who has long been at the top of the list of the richest people, suddenly abandoned the first place in favor of the Frenchman Bernard Arnault, the boss of LVMH. According to the Bloomberg Billionaires Index, Elon Musk has lost half of his fortune since January 2022, while saving a tidy $130 billion. This evaporation is mainly due to the drop in Tesla’s valuation. However, in two years (2020 and 2021), this amount was multiplied by twelve, exceeding the $1,000 billion ceiling.
However, Tesla, which just promoted its de facto China boss Tom Zhu to second place behind Elon Musk, announced earlier in the week that it would ship 1.31 million high-end electric vehicles in 2022. Enviable growth of 40%. The problem is that the Fremont brand remains below its own forecasts (+50%) and Wall Street’s. To increase sales at the end of the year, Tesla even had to carry out unusual promotions. In an email sent to employees — and seen by CNBC — Elon Musk asked them to volunteer to deliver as many vehicles as possible by the end of 2022.
Observers are concerned about the slowdown in sales growth. For the past two years, demand for electric vehicles has outpaced supply, but that trend should “reverse” in 2023, said Adam Jonas, an analyst at Morgan Stanley. “Between the deteriorating macroeconomic environment, unaffordable prices for many, and growing competition, there are hurdles to overcome,” he said. “There is no question that demand is scary,” said Thomas Hayes, chairman of Great Hill Capital.
very expensive cars
The brand no longer has a virtual monopoly on electrics in the US. It included General Motors, Ford, Nissan, Korean Hyundai-Kia, Volkswagen group. And at the top of the range, Mercedes-Benz, BMW, Audi (Volkswagen), Polestar (Volvo) are stiff competition. Tesla still largely dominates the electricity market in the United States with a 65% market share (first nine months of 2022), but in 2020 it was 80%! S&P Global forecasts that its penetration should drop to less than 20% in 2025. By this time, the American electric pie, however, will grow significantly.
Some observers fear that the expensive Teslas (from €53,490 each in France to €130,000) will suffer competition from cheaper electric models. “Large manufacturers will fill the same niche for less money. And it will be difficult for Tesla there, ”Didier Leroy, then vice president of Toyota, predicted two years ago.
Worse, a Reuters survey shows that used Tesla transaction prices are falling faster than those of other manufacturers, which will also affect demand for new models.
Opening of the German factory
Nevertheless, Tesla’s dynamism is striking. This is the manufacturer that grew the most in the world last year. The California firm even reported a 48 percent increase in sales in the United States last year. Another broken record: Tesla’s Shanghai plant delivered 710,000 vehicles in 2022 (also +48%). In 2020, Tesla for the first time passed the mark of 500,000 vehicles sold worldwide, and a year later it was close to a million.
After losing a whopping $4.5 billion between 2016 and 2019, the “tech” firm managed to finally turn a net profit in 2020. After the Shanghai plant, Tesla opened a German plant in Grünheide, near Berlin, last March. We haven’t opened a new car plant in Western Europe since Toyota’s French plant in Valenciennes in… 2001!
At $339 billion, Tesla’s market capitalization, even with a sharp decline, remains the first in the automotive world, and to date. It is ahead of Toyota (210 billion euros), Volkswagen (74), Mercedes (70.5), BMW (58.5), GM and Ford (49 billion each), Stellantis (45 billion euros). Tesla’s valuation is thirty times higher than Renault’s.