Tesla Inc. appears to be in its death throes.
An increasing number of analysts and auto industry experts are publicly proclaiming the days of Elon Musk's grand experiment in pushing environmentally friendly electric vehicles (EVs) is coming to a messy end.
Blame is on Musk's mismanagement and his being afflicted with the "Shiny Thing Syndrome." Or blame it on his many competitors announcing the launch of a slew of EVs in the 2020s that will give cash-strapped Tesla a run for its money in the next decade. You can also blame it on China's worst car industry slump in decades.
Whichever reason, Tesla faces a bleak future -- unless Tesla can pull off "supernatural growth," as one disgruntled analyst put it -- and probable bankruptcy awaits it down the road.
Tesla shares have lost nearly half of its value since mid-December 2018. Last week, Tesla's stock plummeted by about a quarter over the past month while Wall Street analysts continued to lower their stock-price targets and forward-looking estimates for the company's stock.
Also last week, the stock fell below the $200 mark for the first time since late 2016. A growing number of Wall Street experts are saying Tesla may need to restructure or declare bankruptcy in the face of falling demand for its EVs.
Evercore Inc. said Tesla could justify its current valuation only with "supernatural growth." Wedbush Securities Inc. described Tesla's current state as a "code red."
T. Rowe Price, one of Tesla's biggest investors, sold around 81% of its holdings over the first three months of this year.
Demand for Tesla EVs is becoming stagnant, and for Tesla, that's very bad news. Experts note that for a new car company such as Tesla to reach stability, it has to sell hundreds of thousands of cars per. Selling millions is preferable.
Tesla sold a total of 245,240 EVs in 2018, which is respectable for an EV maker but downright dangerous for a car company. But to survive, Tesla has to produce anywhere from 700,000 to 1,000,000 cars a year, an impossible figure for Tesla to achieve.
Apart from the sheer production hell, this will cause, Tesla will have to find a way to cough up the billions and billions of dollars needed to do this.
Since its birth in 2004 and until its adulthood, Tesla was the only EV player worth it's salt. No longer.
Over the next 12 months, almost all other major global automaker has plans to release their own EVs. A market dominated by Tesla will soon become a market where Tesla is one in many players. The net effect will be to slash the sales on which Tesla depends on for its survival.
Analysts note that when Porsche announced its Taycan electric sedan, it's number one source of reservations came from current Tesla owners. This is seen as sign Tesla's customer base want something newer than Tesla's old Model S,3 and X sedans.
