Tesla on the Roller Coaster: Return to Trillion-Dollar Valuation and the Challenges Behind It

Tesla, the internationally renowned pioneer of electric vehicles, has done it again: The company’s market valuation has once more climbed above the magical threshold of one trillion US dollars. This triumphant rise follows an attempt to recover from a sharp devaluation in the tumultuous stock market year of 2022, when the S&P 500 entered a bear market. Such financial roller coasters reflect Tesla’s ongoing growth challenges. After impressive sales figures in recent years, a slowdown is now apparent. In 2023, Tesla achieved deliveries of 1.8 million cars, marking an increase of 38 percent, yet falling short of the ambitious annual target of 50 percent. The first nine months of 2024 even reveal a slight decline of 2.3 percent compared to the previous year. The electric market currently shows signs of weakening demand, marked by buyer concerns regarding the resale value of electric vehicles and a poorly developed fast-charging network. Additional challenges arise from increasing interest rates and higher living costs, which are driving many potential buyers back to traditional vehicles. Intense competition adds tension to the equation. Particularly, the Chinese brand BYD, with its competitively priced Seagull model, poses a serious challenge. With an entry price of under 10,000 US dollars in China, BYD’s strategic pricing forces the giant Tesla onto the defensive. Tesla's CEO, Elon Musk, has dismissed plans to introduce a more affordable model, yet remains optimistic that deliveries could rise by 20 to 30 percent in the coming year. Whether Tesla can meet these expectations remains to be seen. The fact is, the company's stock valuation is now significantly higher even compared to other corporate giants in the trillion-dollar class, a reality that prompts investor protection advocates to advise caution.