Tesla’s sales of electric cars have stalled. But Wall Street investors don’t seem to be worried.
The company’s share price has risen 90 percent since early November as investors have taken an optimistic view of the company’s progress in autonomous driving and bet that its chief executive, Elon Musk, will use his new influence in Washington to Tesla’s benefit.
The increase in the value of Mr. Musk’s 13 percent stake in Tesla has cemented his status as the richest person on the planet. After spending more than $250 million to support Donald J. Trump, he has become so close to the president-elect that some people have begun referring to him as “co-president.”
Still, stagnant sales at Tesla do not bode well for the company or for overall sales of electric vehicles, which are seen as an essential tool against climate change. While carmakers like General Motors and Hyundai are offering a growing selection of electric vehicles, Tesla still accounts for almost half of all electric car sales in the United States and sets the tone for technology.
Mr. Musk has been vocal about many topics on X, the social media platform he owns. He regularly discusses government spending he believes is wasteful, immigrants he blames for crime and his conviction that “woke mind virus is one of the biggest threats to the existence of humanity.”
But he is largely silent about plans to revive Tesla’s sales, providing few details about a new budget-priced car that may sell for as little as $25,000. The company has promised to begin selling a more affordable vehicle by mid-2025 to bring electric driving within reach of the middle class.
Tesla and Mr. Musk did not respond to requests for comment.
Some analysts wonder whether he has lost interest in cars as he juggles numerous other activities. They include X; SpaceX, the federal government’s main rocket contractor; and his role as co-head of a newly formed Department of Government Efficiency, which will advise Mr. Trump on slashing federal spending.
Mr. Musk has not shown the same level of dedication to carmaking that he did in 2018 when Tesla was struggling to mass-produce the Model 3 and he slept at the factory, said Kenneth Boyer, a professor of business at Ohio State University.
“He was all in,” said Mr. Boyer, whose recent book, “The Electric Vehicle Revolution: Five Visionaries Leading the Charge,” includes a chapter on Mr. Musk. “The question now is, what is Elon committed to, or is he spread too thin?”
Tesla is about to release its sales figures for the last three months of 2024. Data and estimates available so far indicate that its sales have fallen in all of its major markets.
In the United States, Tesla sales will be down around 6 percent in 2024, a bigger decline than any carmaker except the troubled Stellantis, according to estimates by Cox Automotive. Tesla will end the year with 633,000 cars sold in the United States, Cox expects, giving it a 4 percent share of the total car market.
Sales of Teslas may have spiked toward the end of the year as buyers rushed to take advantage of federal tax credits, worth up to $7,500, that Mr. Trump and Republicans in Congress may repeal or slash.
In the European Union, Tesla sales through November fell 15 percent from a year earlier, to 211,000 cars, according to the European Automobile Manufacturers’ Association. Tesla sales also slipped in China, the world’s largest car market.
It was inevitable that Tesla, a pioneer in battery-powered cars, would lose market share as other carmakers introduced more such models. Until a few years ago, Tesla had the market largely to itself. Now, it faces stiff competition from the likes of BYD in China, Volkswagen and BMW in Europe, and G.M., Ford Motor and others in the United States.
But Tesla’s situation appears to be more concerning. Its sales are falling even as the overall market for electric vehicles grows, rising 25 percent through November globally, according to Rho Motion, a research firm.
Some investors hope that a new, cheaper Tesla could supercharge sales. The least expensive Tesla, the Model 3 sedan, starts at $42,500 in the United States before government incentives.
A $25,000 Tesla would make electric cars accessible to many more buyers. The average sales price for electric vehicles currently on the market is more than twice that.
“The idea of Tesla being able to open up the market to a wider range of buyers with an even more affordable option than the Model 3 — that is what has investors most excited,” said Ben Rose, president of Battle Road Research, who expects Tesla shares to outperform the broader stock market.
But Mr. Rose acknowledged, “This seems to be the product that Elon Musk is least excited about.”
Tesla has not displayed a prototype or revealed much information about a lower-cost vehicle’s price or performance. That contrasts with the company’s Cybertruck, a futuristic pickup that Tesla unveiled in 2019, four years before it went on sale.
Aside from the Cybertruck, which starts at $80,000, Tesla has not introduced a completely new vehicle since the Model Y sport utility vehicle in 2020. (Tesla did begin selling an updated version of the Model 3 this year.)
Early indications are that the angular, stainless steel Cybertruck does not have broad enough appeal or a low enough price to revive the company’s overall sales. Tesla sold 28,000 Cybertrucks through September, according to Cox, making it the best-selling electric pickup in the United States. But the company sells only a tenth as many Cybertrucks as it does the Model Y, Tesla’s most popular vehicle.
Car shoppers are yearning for less expensive electric vehicles. Used Model 3s priced around $25,000 are among the fastest-selling vehicles on CarGurus.com, said Kevin Roberts, director of economic and market intelligence at the online sales site. “When the price comes down, the interest is there,” he said.
Mr. Musk has displayed much more enthusiasm when talking about Tesla’s plans to sell self-driving cars that could function as driverless taxis. Tesla’s share-price gain has been driven largely by faith in Mr. Musk’s ability to deliver the technology and optimism that his pull with the new administration will help clear away regulatory hurdles.
Most analysts believe wide use of self-driving taxis is still years away, though they are starting to hit the road in some places. Waymo, a division of Google’s parent company, offers driverless taxi rides in San Francisco, Phoenix and Los Angeles and is expanding to Atlanta, Miami and Austin, Texas. Many companies are also testing autonomous taxis extensively in China.
But many investors appear to be convinced that Tesla will come to dominate the self-driving taxi business.
The share price “is very strongly tied to what people think of Elon Musk,” said Leonard Kostovetsky, an associate professor at the Zicklin School of Business at Baruch College, “whether you think he is a genius or just lucky.”
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