Tesla is grappling with a series of setbacks as its stock continues to decline, dropping more than 8% on Tuesday and losing most gains achieved after President Donald Trump's election victory. With the stock now approximately 20% above its pre-election level, Tesla's market performance is under intense scrutiny. The challenges come amid revelations of CEO Elon Musk's controversial influence in Washington and dissatisfaction among Tesla users in China regarding the company's autonomous driving technology.
The latest slide in Tesla shares follows a report from Reuters, indicating that the company's much-anticipated upgrade to its partially automated driving systems has left many owners underwhelmed. Users in China have voiced concerns that the "navigate on city streets" feature does not meet Elon Musk's promises of self-driving advancements. Compounding Tesla's woes, other electric vehicle manufacturers in China, such as BYD, offer their automated driving systems at a significantly lower cost or even for free, putting additional pressure on Tesla's competitive edge in the market.
These challenges are further reflected in Tesla's financial performance, as the company reported earnings and sales that fell short of analysts' expectations for the fourth quarter. Automotive revenue saw an 8% decline compared to the previous year, while operating income plummeted by 23%. The company attributed the downturn to reduced average selling prices across its aging lineup, which includes the Model 3, Model Y, Model S, and Model X vehicles.
Tesla's stock has already plummeted 25% at the start of the year, a stark contrast to the Nasdaq's modest 1.5% decrease. This downturn has significantly impacted Musk's net worth, with a loss exceeding $100 billion, though he remains the world's wealthiest individual with a fortune valued at roughly $380 billion.
In addition to these financial challenges, Tesla is facing opposition due to Musk's extremist political rhetoric and activism. Protests have been organized at Tesla stores and service centers by opponents in various markets. Meanwhile, Tesla's sales in California, once its largest domestic market, dropped 11.6% in the fourth quarter of 2024, according to the California New Car Dealers Association.
Elon Musk's unparalleled access to government computer systems and taxpayer data has sparked controversy, particularly regarding his involvement in mass firings within agencies responsible for overseeing his companies, including Tesla. These developments have raised questions about regulatory oversight and corporate governance.
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