There's a moment in Shakespeare's Hamlet where King Claudius says "when sorrows come, they come not single spies but in battalions."
Tesla (TSLA) CEO Elon Musk might understand that feeling, given the electric vehicle maker's string of recent challenges.
The company's stock has been taken a battering in the wake of price cuts, increased competition with Chinese automakers and slowing demand for EVs.
Tesla, a member of the so-called Magnificent Seven, is the worst performer in the S&P 500, with shares down about 29.5%.
There is also another wrongful death lawsuit involving Telsa’s Autopilot that is set for trial in San Jose the week of March 18.
In addition, production at Tesla’s Berlin–Brandenburg Gigafactory in Grünheide last week came to a standstill and workers were evacuated after a power outage that officials suspected was caused by arson.
A spokeswoman said there is an initial suspicion that a terrorist organization may have been involved in the attack and Germany’s top prosecutor has taken over the investigation into the incident, AP reported.
Authorities in the state of Brandenburg, where the plant is located, said unidentified people were suspected of deliberately setting fire to a high-voltage transmission line on a power pylon.
A far-left organization called the Volcano Group said it was behind the fire and accused Tesla in a letter of “extreme exploitation conditions” and called for the “complete destruction of the gigafactory,” German news agency dpa reported.
Trouble at gigafactory
"These are either the dumbest eco-terrorists on Earth or they’re puppets of those who don’t have good environmental goals," Tesla CEO Elon Musk said in a March 5 post on X, formerly Twitter. "Stopping production of electric vehicles, rather than fossil fuel vehicles, ist extrem dumm."
The facility has been the subject of controversy. A massive protest took place near the Grünheide factory on March 10 involving hundreds of environmental activists who are against Tesla's expansion of the plant.
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At the same time, local residents and plant workers staged a counter demonstration showing support for the American EV automaker.
On the bright side, the electricity at the Grünheide facility could be restored as soon as the evening of March 11.
These are either the dumbest eco-terrorists on Earth or they’re puppets of those who don’t have good environmental goals.
— Elon Musk (@elonmusk) March 5, 2024
Stopping production of electric vehicles, rather than fossil fuel vehicles, ist extrem dumm.
Previously, the automaker anticipated power would not be restored until March 17. However, the local power company is anticipating power resumption to come sooner.
Tesla and other EV automakers are also facing weakening sales.
Growth in the global electric-vehicle market is set to slow to 27.1% this year as a reduction in state subsidies makes the cars less appealing to buyers, according to the research firm Canalys.
The figure follows an estimated growth of 29% in 2023 at 13.7 million units, when government incentives helped the adoption of EVs.
Despite a 20% drop in the average sales price of EVs in 2023, Jason Low, principle analyst at Canalys said that “insufficient product choices and inconvenient charging experience hampered demand, impacting the market growth of EVs.”
In January Tesla itself warned investors that vehicle-delivery growth rates would be "notably lower" than 2023 levels, with earnings likely to decline given its focus on price cuts.
Weaker-than-expected sales figures from China are also adding to overall pressures on Tesla's aggressive delivery targets.
Bulls express concerned
Last week, Morgan Stanley analyst Adam Jonas, a longtime Tesla bull, lowered his price target by $25 to $320 on the company's shares, saying that electric-vehicle demand was continuing to weaken in key markets including China despite the price cuts.
Investor Gary Black, another well-known Tesla bull, drew questions from some investors recently after his Future Fund chose to cut its position in the electric-vehicle maker, saying that Wall Street's first-quarter estimates for the electric vehicle maker remain too high.
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Deutsch Bank analyst Emmanuel Rosner had a similar view, which he detailed in a March 11 investor’s note.
The analyst said that he expected Tesla’s first quarter deliveries and earnings to miss Wall Street’s current expectations “by a wide margin and continue to see material downside risk to full-year 2024.”
He cited several factors, including low Model 3 production in the U.S. since the company's Highland refresh, a particularly slow Cybertruck ramp up, and overall pressure globally from weak EV demand.
The analyst also cut his full year delivery estimate to roughly 1.96 million units, which represents only high single digit growth for the year, compared with a prior mid-teens forecast.
"We see pressure on margins and earnings, as the company already announced deep price cuts in both China and Europe earlier in the quarter, and made further moderate price adjustments in February to incentivize vehicle purchases," Rosner said.
The analyst also said that the slower ramp up in Model 3 in the U.S. and an earlier factory shut down as well as the recent arson attack at the Berlin facility will have an impact factory efficiency gains, he said.
With the new labor costs and the margin dilutive Cybertruck coming on line at the start of 2024, the analyst said that he expect first-quarter margin to slide deeper on a quarter-over-quarter basis, "with limited room for improvement throughout the year."
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