Tesla Shares Fall to Worst Year Yet as Elon Musk Focuses on Twitter

Tesla Inc. is a publicly traded company that designs, manufactures, and sells electric vehicles and energy storage systems. The company was founded in 2003 by a group of engineers who wanted to create a sustainable energy company. Tesla's mission is to accelerate the world's transition to sustainable energy. The company is headquartered in Palo Alto, California.

Tesla is on track for its worst annual stock performance on record as investors grow increasingly concerned about Elon Musk’s Twitter ownership, declining demand for Tesla’s electric vehicles, and slumps in the broader market in a higher interest rate environment.

Tesla's recent share price decline represents a significant reversal for the world's most valuable car company. Prior to this, Tesla had been one of the auto industry's biggest success stories during the early 2020s, a period plagued by chip shortages, snarled global supply chains and shutdowns related to Covid-19.

Tesla's stock has lost roughly 70% of its value since hitting an all-time high in November 2021. With global economic uncertainty deepening and consumers having more electric vehicle choices, there is concern on Wall Street that Tesla might need to sacrifice profitability to maintain its growth pace.

Tesla's stock price has declined more than the overall market and many of its competitors, although some electric vehicle startups have done worse.

Tesla entered the new year in a strong position, thanks to better-than-expected results throughout the Covid-19 pandemic and strong vehicle pricing. The company is well-positioned to continue its momentum in the coming year.

The company has had more than a dozen consecutive profitable quarters, helping it to build up a cash cushion of around $20 billion. This rivals the cash reserves of some of the traditional car manufacturers and is a testament to the company's turnaround.

Wall Street has lowered its expectations for Tesla's growth this year after the company's Shanghai assembly plant was shut down for an extended period due to Covid-19.

Now, with rising interest rates and global economic uncertainty, there is concern that demand for new vehicles may be weakening.

Earlier this year, customers faced months-long waits for many Tesla models. However, this is no longer the case.

Tesla is offering discounts and incentives in China and the United States to move cars before the end of the year. In China, prices have been cut, and in the United States, Tesla is offering buyers of certain EVs a $7,500 credit and 10,000 miles of free fast-charging if they agree to take delivery this month.

Tesla lowered its full-year growth expectations in October, with Chief Financial Officer Zach Kirkhorn saying the company expected to finish the year just shy of its original 2022 goal of increasing deliveries by 50%. The company delivered around 936,000 vehicles to customers in 2021. It would need to hand over more than 1.4 million this year to achieve its original target.

In a recent interview, Mr. Musk spoke about the challenges his company is facing, saying that there is "stormy weather ahead" but that things will eventually improve. He remains optimistic about the future of his business and is confident that they will weather the storm.

As more and more drivers look to switch to electric vehicles, they have more and more options to choose from. Tesla has been the leader in the space for some time, but now companies like Ford and Rivian are starting to make serious inroads.

BYD Co., which is backed by Warren Buffett, is widening its lead over Tesla in China.

Since Tesla's market capitalization peaked, Mr. Musk has sold more than $39 billion of Tesla stock. He has pointed to his involvement with Twitter in explaining some of those sales. In October, he bought the social-media company in a deal valued at $44 billion, with Twitter taking on roughly $13 billion in debt in the process. He said he wouldn't sell more Tesla shares through next year.

Some investors have called on Tesla to repurchase its own shares for the first time, but Mr. Musk has cautioned that it would be unwise to do so if it would put the company at risk of a severe recession.