Elon Musk dumped U.S. $3.95 billion-worth of Tesla stock on Monday and rattled investors already spooked by his purchase last week of social media platform Twitter for $44 billion. Tesla stock reached a two-year low on Thursday, having lost 46% of its value this year, made worse by production problems in China, where Tesla makes one-third of its cars.
The global battery electric vehicle fleet grew to 12 million in 2021, up from 50,000 in 2011. The Texas-based company alone sold more than 1.2 million cars in the past 12 months, according to car website Inside EVs.
Since Tesla hired the South African-born businessman Musk as CEO in 2008, he became the face of BEVs. Zero-emissions transport are bad news for motor oil companies, as lubricant demand shrinks and governments ban internal combustion engines. But taking the CEO position at Twitter has upset shareholders, an investment consultant told Lubes’n’Greases.
>Read more about EV lubrication here.
“One concern is that Musk’s attention is now being diverted to Twitter. It’s pretty unheard of to have one person running two major companies,” John Yackley, CEO of investment company Golden Horn Capital, told Lubes’n’Greases. “Other concerns are some of the production facilities in China are always being intermittently COVID-19 impacted by their zero-COVID policy.”
Yackley added that the value of the company followed the recent market downturn, which has impacted all companies.
“It’s always been an expensive stock, which makes it vulnerable. The stock market as a whole has fallen about a quarter and Tesla having risen more than the average stock on the way up is suffering on the way down,” Yackley said.
Musk risks losing customers, who are increasingly worried by his social media activities. In 2021, he denigrated Senator Bernie Sanders, whose Green New Deal emphasises clean transport. In October, he parroted Russia’s talking points on its invasion of Ukraine. That tweet drove Tesla’s share price down. He also tweeted in May his intention to cross the political aisle to the Republican side.
“Tesla customers tend toward being more liberal than conservative, and he essentially called for people to vote for the Republicans on Twitter. So, he seems to have bought Twitter to antagonize his customers. And now they are likely not happy with his behavior.” ESSEC marketing and innovation professor Steven Seggie told Lubes’n’Greases.
Carmakers at home and abroad have chipped away Tesla’s market lead. Volkswagen is nipping at Musk’s heels with 293,000 EV deliveries in 2022, an increase of 25% year on year. While Tesla’s 900,000 deliveries in 2022 to date, although more than VW, is less than expected.
“Silicon Valley always positioned the rise of Tesla as a software play. In their whole perspective, everything is software. But the legacy carmakers are catching up with the technology,” Seggie said.
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