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The student news site of St. Dominic High School

Crusader Nation

The student news site of St. Dominic High School

Crusader Nation

Tesla in Trouble?

Elon+Musk+stands+beside+the++modern+2017+Tesla+Model+3
Maurizio Pesche, Business Insight
Elon Musk stands beside the modern 2017 Tesla Model 3

Tesla, an automobile company founded in 2003, has been America’s leading manufacturer of electric cars for years. They produce approximately 1.3 million vehicles per year, and in 2023 raked in a 16.6 billion dollar profit. However, recent reports that Tesla cars are easily compromised by cold weather, as well as controversies involving Tesla’s CEO Elon Musk, have contributed to the company’s market value plummeting over the past week. 

On January 25th, Tesla’s shares plunged a sizable 12%. Basically, this means that there were more people who sold their Tesla stock than people who bought new, causing their market value to fall by $80 billion in one swoop. Now, the company sits at the lowest stock level in 21 months.

A few major issues were key in causing the sudden share decline. While Tesla’s 2023 revenue of $16.6 billion may sound like a ludicrous amount of money, that number was actually a 13% decrease from 2022’s profit, which was $19.2 billion. As far as the volume of products sold, a 38% increase in deliveries was reported from 2023 compared to 2022. However, Tesla aims for 50% increases from year to year. According to market researcher Dan Ives, Elon Musk had no answer for the investors wondering why profits have been shrinking.

”We were dead wrong expecting Musk and team to step up like adults in the room on the call and give a strategic and financial overview of the ongoing price cuts, margin structure, and fluctuating demand,” Ives said Thursday, according to CNN’s website.  

Other recent events in the company may have influenced Tesla investors to jump ship. Elon Musk has repeatedly voiced concerns that Chinese car companies such as BYD Auto and SAIC Motor, Tesla’s direct competitors, will start to find success in America and dominate the electric car market. People who own stock in Tesla are feeling less and less confident that the company will remain a juggernaut in the automobile industry in the long-term. Additionally, issues with Tesla cars’ cold-weather performance are causing previous customers to doubt the brand’s reliability. During the stretch of unusually cold temperatures that seized Midwestern America in mid January, many Tesla batteries could not withstand the sub-zero conditions, and died spontaneously. Charging stations were finicky at best in this kind of weather, and sometimes completely unusable.

”I’ve been here for over five hours at this point, and I still have not gotten to charge my car. A charge that should take 45 minutes is taking two hours,” Tesla driver Brandon Welbourne said to CBS Chicago.

Elon Musk has wound up at the center of a fair-share of controversies himself. Since his acquisition of the social media platform formerly known as Twitter, now renamed “X”, Musk has removed censorship that barred hate speech from being spread across the platform, leading to a rise in racist and antisemitic comments going viral without consequences. When X’s advertisers and sponsors threatened to retract their support of the app due to these scandals, Musk accused them of blackmail, according to the New York Times. With Musk’s behavior becoming increasingly volatile, prospective buyers might be hesitant to support him with a purchase of a Tesla vehicle.

The fate of Tesla will depend on getting their stocks back on track, and perhaps also imploring their CEO to repair his reputation. If things keep trending down for Tesla, another up-and-coming electric car might become the new top dog, just like Musk feared.

 

   

 

  



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About the Contributor
Cameron Schwent, Staff Writer
Cameron Schwent is a junior at St. Dominic. She is a member of Writer’s Guild and Student Ambassadors and participates onstage in St. Dominic’s theater program. She loves cats, creative writing, and playing The Sims.

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