Tesla Stock and EV Market Take a Tumble

<p>Tesla's charismatic (?) CEO, Elon Musk, recently delivered a pretty
downbeat performance at Tesla’s earnings call. Musk’s misery left the EV world in
a state of disarray. Musk, typically known for his unbridled optimism and ambition,
was subdued as he delivered bad news.</p><p>Tesla's Rollercoaster Ride</p><p>In a striking departure from his usual demeanor, Musk didn't hesitate
to voice his concerns during the <a href="https://www.fool.com/earnings/call-transcripts/2023/10/18/tesla-tsla-q3-2023-earnings-call-transcript/">earnings
call</a> in a stark contrast to his earlier proclamations of Tesla's "<a href="https://www.wsj.com/articles/elon-musk-calls-tesla-recession-resilient-as-wall-street-eyes-demand-11666302911">recession-resilience</a>."
Despite recording positive revenue growth, the <a href="https://www.financemagnates.com/tag/tesla/">EV maker</a> experienced
declines in delivery, production, and average selling prices during the third
quarter of 2023. Though the operating profit remains in the black, it has seen
a substantial drop since the same period last year.</p><blockquote><p lang="en" dir="ltr">Q3 2023 Earnings Call <a href="https://t.co/eSwixzYTJD">https://t.co/eSwixzYTJD</a></p>— Tesla (@Tesla) <a href="https://twitter.com/Tesla/status/1714755694144999746?ref_src=twsrc%5Etfw">October 18, 2023</a></blockquote><p><a href="https://www.financemagnates.com/tag/elon-musk/">The Tesla CEO</a>
emphasized the pressing need to make Teslas more affordable, relentlessly
hammering on the "interest thing" – referring to rising interest
rates that have the potential to increase the overall cost of the car.</p><p>High-Interest Headaches in Mexico</p><p>Even Tesla's expansion into Mexico has been fraught with issues. While
Tesla is in the process of "laying the groundwork" for a new factory
in Monterrey, Mexico, Musk revealed that they're not ready to go "full
tilt" due to, you guessed it, "the high interest rate environment
that we're in."</p><p>It appears that Musk has developed a certain level of financial PTSD
stemming from the 2009 bankruptcies of General Motors and Chrysler, leading him
to be more cautious in today's turbulent economic landscape.</p><p>The Stock Market Ripple Effect</p><p>Tesla's gloomy earnings call <a href="https://www.barrons.com/livecoverage/stock-market-today-101923/card/tesla-and-other-ev-stocks-fall-nCyVY62qHgeJjZtfbPiu">reverberated
throughout the stock market</a>. The company's stock plummeted by more than 9%
before markets closed on October 19th. Notably, other US-based EV players such
as Rivian (-5.1%), Lucid (-4.2%), and Fisker (-3.5%) also felt the impact of
Tesla's downward trajectory.</p><p>The reverberations of Tesla's performance are not confined to the
United States. Leading Chinese EV manufacturers like BYD, XPeng, Li Auto, Nio,
and Geely <a href="https://www.cnbc.com/2023/10/19/chinese-ev-stocks-fall-after-teslas-disappointing-q3-results.html">saw
their stocks drop by 2-9%</a> on the morning of October 20th. This suggests
that Tesla's influence extends far beyond American borders, affecting global EV
markets.</p><p>While Musk’s <a href="https://www.financemagnates.com/fintech/is-elon-musk-a-positive-or-negative-force-for-markets/">impact
on markets has been debated in the past</a>, in this case there’s no doubt he
sent stocks down.</p><p>The Enigma That Is Cybertruck</p><p>But there is something on the horizon. Tesla will produce around
250,000 Cybertrucks per year by 2025, <a href="https://www.bloomberg.com/opinion/articles/2023-10-18/earnings-musk-s-cybertruck-isn-t-driving-to-tesla-s-rescue">but
the road ahead is far from smooth</a>. Musk described the Cybertruck as a
"special product" that's exceptionally challenging to bring to the
market, reach volume production, and turn into a profitable venture due to its
innovative nature.</p><p>Musk's Billion-Dollar Reality Check</p><p>Despite the stock slump, Musk is still the world's richest individual,
holding a 13% stake in Tesla. Nevertheless, his net worth took a considerable
hit, dropping by a staggering $16 billion after the unsettling earnings call. Damn
shame.</p><p>Tesla's Charging Connector Takes the Lead</p><p>On a brighter note for Tesla, its North American Charging System (NACS)
connector <a href="https://www.teslarati.com/general-tesla-nacs-supercharger-vs-electrify-america/">is
gaining traction</a>. Toyota and Lexus are following in the footsteps of other
legacy automakers like Ford, GM, Honda, and BMW by <a href="https://www.theverge.com/2023/10/19/23924413/toyota-lexus-tesla-nacs-supercharger-electric-vehicle-charging-2025">adopting
Tesla's charging connector</a>. Notably, NACS even received the White House's
endorsement as part of the federal government's EV charging expansion plan.
These connectors are not only more compact but also twice as powerful as the
traditional Combined Charging System (CCS) – a clear win for Tesla in the
charging infrastructure arena.</p><p>Elon Musk's subdued earnings call may have left some scratching their
heads, but it's undeniable that it has sent ripples through Tesla's stock and
the broader EV industry. Whatever ever happens, we’re sure Musk will be back to
usual, animated self in the near future.</p>

This article was written by Louis Parks at www.financemagnates.com.