Tesla Under Pressure: Weak Sales Despite Innovation Push

Tesla's stock price dropped by 12% in 2024, even though the S&P 500 Index gained an impressive 23%. The electric pioneer is currently grappling with sluggish sales, while competitive pressure in the industry and waning consumer demand are on the rise. Last Thursday, Tesla unveiled its long-awaited Cybercab Robotaxi at the "We, Robot" event, which is fully operated by self-driving software. According to Dan Ives of Wedbush Securities, autonomous driving could represent a trillion-dollar opportunity for Tesla in the long run. Ives currently labels Tesla as the most undervalued AI stock, though this perspective is not universally shared. Tesla delivered a record-breaking 1.8 million electric vehicles in 2023, an increase of 38% compared to the previous year. However, CEO Elon Musk's declared goal of boosting production by 50% annually is in question, as current delivery figures fall short. In the current year, only 1.3 million vehicles were sold in the first three quarters, a decrease of 2.3% compared to the same period last year—potentially marking the first annual decline since the Model S was introduced in 2011. To counter this, Tesla plans to launch a cost-effective model that could be available next year for around $25,000. While analysts like Dan Ives point to long-term opportunities through self-driving cars and the Cybercab, investors are concerned about the current weakening of the core business. The FSD software, a subsection of artificial intelligence, requires significant investment. Tesla plans to invest $10 billion this year in the infrastructure of its data centers. The future monetization of autonomous technologies could yield substantial returns; however, the project faces regulatory and technological challenges. Even though prominent analysts forecast strong growth potential for FSD, Tesla remains under pressure with the recent stock declines and forecasts. The stock value dropped by 8% immediately after the Cybercab’s unveiling, reflecting market uncertainties. The question remains whether Tesla will be able to rekindle investor interest.