Tesla lost $12 billion in stock value Thursday following the electric vehicle maker’s poor sales numbers and Volvo’s recent decision to transition to all electric vehicles.
The Silicon Valley company has seen its shares fall by nearly 17 percent since Monday, when CEO Elon Musk announced that the company would begin producing the Model S vehicle. The tumble comes as Tesla’s sales numbers at the end of the second quarter were much lower than analysts predicted.
Volvo said Wednesday that it will soon phase out fossil fuel-powered vehicles and instead begin churning out electric vehicles, a move that could potentially render Tesla’s niche position irrelevant.
The Sweden-based Volvo plans to offer only hybrid or full-electric motors on every new model launched in 2019 or later. The company promises to continue producing full-combustion vehicles during the transition period. Volvo aims to make its last full-gasoline or diesel car in 2025.
“Tesla needs to focus on quality over speed as they ramp up the Model 3,” Michelle Krebs, a senior analyst at Autotrader, told reporters Thursday. “Tesla is no longer going to own electric vehicle territory exclusively, and traditional automakers really know how to crank out the cars.”
Volvo’s involvement, not to mention Tesla’s poor performance this past financial quarter, could be the start of hard times for Musk’s electric vehicle adventure.
Tesla managed to deliver 22,000 vehicles in the second quarter, fewer than many analysts expected. Deliveries slowed from a record 25,000 cars in the first quarter, partially because of a lack of battery packs. Batteries for electric vehicles are composed of rare materials that are not easily mined.
“We believe the excess production above deliveries … point to a plateauing of demand for its current products,” David Tamberrino, a Goldman Sachs analyst, wrote in a note released Wednesday that referred to production on Tesla’s Model S and Model X.
Goldman Sachs lowered its six-month target price on Tesla to $180 from $190, indicating a nearly 50 percent decline from Monday’s closing price of $352.62. Tesla shares were down by about 1.5 percent in premarket trading Wednesday.
The turmoil has resulted in Tesla losing the top spot to General Motors in the automotive market. Volvo’s news and the poor sales numbers reduced the California-based company’s capitalization to $50.7 billion from a high of about $63 billion.
Content created by The Daily Caller News Foundation is available without charge to any eligible news publisher that can provide a large audience. For licensing opportunities of our original content, please contact [email protected].