Tesla’s market plunge: A $234 billion dollar hit

Elon Musk’s Tesla has seen a 29% plunge in its stock value within a mere 10 weeks, reaching its lowest point since May.

As of Wednesday, Tesla’s market value has plummeted from nearly $800 billion to slightly above $550 billion, shedding a staggering $234 billion. To put this colossal loss into perspective, it exceeds the total worth of industry giants McDonald’s ($212 billion), Disney ($202 billion), and Cisco ($199 billion), marking a profound shift in the automotive landscape.

This decline even rivals the market cap of entertainment behemoths Netflix ($259 billion) and Coca-Cola ($257 billion), eclipsing the valuations of financial powerhouses American Express ($158 billion) and Nike ($148 billion). It is over double the value of ubiquitous coffee chain Starbucks ($104 billion) and more than triple the size of dining favorite Chipotle ($71 billion), logistics giant FedEx ($62 billion), and data powerhouse Palantir ($58 billion).

Musk’s Wealth Erodes: A $40 Billion Personal Setback

In tandem with Tesla’s stock plunge, Elon Musk’s personal fortune has taken a hit, dwindling by nearly $40 billion this year alone, dipping below the $190 billion threshold. This financial reshuffling has relegated Musk from the top spot on Bloomberg’s billionaire ranking to a third-place standing, ceding leadership to Bernard Arnault and Jeff Bezos.

Tesla’s Rollercoaster: From Soaring Highs to 60% Drop

While Tesla’s shares soared almost fivefold since the start of 2020, they now face a daunting 60% drop from their November 2021 zenith when the automaker boasted a valuation of $1.2 trillion. The reasons behind this market plunge include apparent signals of dwindling consumer and rental demand for electric vehicles, forcing Tesla to slash prices amid fierce competition in China, particularly from companies like BYD.

Hertz’s Electric Exit: 20,000 EVs Off the Lot

Adding to Tesla’s woes, car rental giant Hertz is shedding 20,000 electric cars from its U.S. fleet, constituting a third of its global electric vehicle inventory. The move, driven by concerns over demand and heightened repair costs for electric cars, is part of Hertz’s strategy to rebalance supply and demand for electric vehicles, eliminating lower-margin rentals and mitigating losses tied to EVs.

As signs of Hertz’s hesitancy to fully embrace electric vehicles emerge, the company’s decision to slow down electrification plans in October 2023, citing double repair costs compared to conventional vehicles, raises questions about the industry’s readiness for an all-electric future.

Hertz’s Electric Sell-Off: A Shift from EV Enthusiasm to Pragmatism

While Hertz had initially invested in 100,000 Teslas in 2021 and planned a sizable purchase from Polestar, the recent move signals a significant pivot away from electric aspirations. The company’s CEO, Stephen Scherr, underscored the financial burden, stating that electric vehicles incur roughly double the damage repair costs of traditional internal combustion engine vehicles.

Currently, Hertz is selling more than 700 electric cars through its used car platform, predominantly comprising Tesla Model 3 and Model Y vehicles. This shift raises questions about the broader trajectory of the electric vehicle market and the challenges companies face in aligning aspirations with economic realities.