14.03.2024 13:36 | Monitoring
Shares of billionaire Elon Musk’s Tesla have fallen 32% since the start of the year, and analysts expect an even bigger drop next year. According to economist Lukáš Kovanda, it appears that the fashion for electromobility is running out. According to Kovanda, those who wanted to buy a car for environmental reasons or to show that they have what it takes have already done so. And the majority of other residents do not plan to buy an electric car, either because of the high price, reduced subsidies or imperfect infrastructure.
Zbyněk Pecak
Description: Electric car – illustration photo
Shares of Tesla fell again on Wednesday morning after analysts at Wells Fargo said the stock “continues not to look so good” and that the electric car maker is a “non-growth company.” Bloomberg reports.
The electric car maker traded at its lowest price in 10 months after Wells Fargo cut its rating from “stable” to “decline.” Tesla shares, which have lost nearly a third of their value since the start of the year, were down 3.2% at $171 on Thursday morning.
The downgrade comes as the overall electric car market has cooled and competition has intensified, prompting Tesla to announce a series of price cuts to boost demand. But according to analysts at Wells Fargo, the price cuts are having little effect on Tesla’s sales and instead further reducing its profits.
Wells Fargo said Tesla is unlikely to show any growth in sales volume this year and even a decline next year. The bank noted that its earnings estimates for Tesla in 2024 and 2025 are now down 32% and 52% lower than the previous year.
According to some analysts, the negative mood towards Tesla boss Elon Musk has an effect on this. The influx of cheaper Chinese electric cars has also had an impact, with what some say has been a “brutal price war in electric cars”.
Economist Lukáš Kovanda claims that the American market shows that electromobility is exhausted. “Electric cars are going out of fashion. Tesla’s sales will stagnate this year, and even fall next year, Wells Fargo bank shocks in its new forecast. Tesla shares have fallen by 32% this year alone, while the US stock market is growing by more than 8%,” Kovanda points out.
According to him, there are several reasons. “First of all, people who wanted to signal virtue through extravagant consumption (understand: by buying an expensive car to show others ‘that they have what it takes’ to even take care of the environment), have already bought an electric car. Others, the vast majority of whom are not interested in purchasing an electric car,” Kovanda is clear. According to him, the “snobbish component of demand” has also run out, as artificial intelligence is now more in vogue for the rich.
In addition, due to the fiscal problems of Western governments, subsidies for electric cars are being reduced. “Even countries like Germany fail to develop the necessary infrastructure satisfactorily, especially a sufficiently dense network of charging stations,” Kovanda adds another reason.
Furthermore, it is becoming increasingly clear that the environmental benefit of electromobility is at least questionable, “if the calculation includes not only the operation of the car, but also its production, including the production of electric batteries. It has already become too much noise that those who drive an electric car actually often drive on coal, often support the Chinese economy, the plundering of nature for nickel mining in Indonesia, child labor in the Congo,” adds Kovanda.
Electric cars are going out of style. Tesla’s sales will stagnate this year, and even fall next year, Wells Fargo bank shocks in its new forecast. Tesla shares are down 32% this year alone, while the US stock market is up more than 8%.
What is behind the weak demand?
1) People,… pic.twitter.com/emcdH23O5L— Lukáš Kovanda (@LukasKovanda) March 14, 2024
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author: Jakub Makarovič
2024-03-14 12:03:00
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