As electric vehicle demand wanes and competitors gain ground, Tesla’s stock loses a year of gains, dipping below the $150 mark

Tesla’s share price fell dramatically on Thursday, closing at $149.93, a drop of $5.52 or 3.5%. This downturn marks a significant retreat from the $150 threshold, a level last seen in January 2023, erasing a full year’s worth of stock gains. Throughout 2024, Tesla shares have declined by more than 39%, reflecting a troubling period for the company in a challenging automotive market.

The slump in Tesla’s fortunes is largely due to a slowdown in electric vehicle sales and escalating competition within the sector. Tesla’s sales figures from the first quarter significantly underperformed, with the company delivering approximately 387,000 vehicles, a drop of nearly 9% compared to the 423,000 vehicles sold in the same period last year. These figures fell short of analyst expectations, highlighting the competitive pressures facing the electric car giant.

In response to these challenges, Tesla announced plans this week to reduce its global workforce by at least 10%. Elon Musk, Tesla’s CEO, expressed his reluctance about the layoffs in a memo to employees, emphasizing the need for the company to remain lean and agile to foster innovation and prepare for future growth opportunities.

Further intensifying the scrutiny on Tesla, the company is scheduled to report a decrease in first-quarter earnings on April 23. Analysts and investors are eagerly awaiting the conference call, hoping for detailed explanations from Musk concerning the company’s cost-cutting measures, strategic plans, product roadmap, and overall vision.

The backdrop of these developments includes modest growth in the electric vehicle market overall. According to a CBS News report from Detroit, electric vehicle sales increased by just 2.7% in the first quarter of 2024, a stark contrast to the 47% surge in 2023 that propelled record sales figures.

Moreover, Tesla faces internal governance questions, with a re-vote scheduled on Musk’s $56 billion compensation package from 2018, previously voided by a Delaware judge. The company also proposed relocating its state of incorporation from Delaware to Texas, with the annual shareholders meeting set for June 13 to discuss these issues.