A bad, very bad year for Tesla got even worse on Friday with reports that Elon Musk’s powerhouse is cutting EV production at its plant in China.
Tesla cut production at its Shanghai plant (which produces products for both domestic and international markets) starting earlier this month and asked employees to work fewer days. Bloomberg reported this.citing people familiar with the situation.
The company’s shares have already fallen more than 31% since the start of the year and fell as much as 4% in intraday trading on China’s earnings before recovering slightly. Shares were down just under 2% as of Friday afternoon. Year to date, the S&P 500 is up about 10%.
Several setbacks over the past few months have wiped out nearly $250 billion from the company’s market capitalization.
Late last year, Warren Buffett-backed BYD overtook Tesla as the world’s leading electric vehicle maker by sales. Chinese electric vehicle company delivered 526,409 vehicles in the fourth quarter, up about 8% from 484,507 vehicles. delivered by Tesla.
Chinese automakers are increasingly making their mark on the electric vehicle market and the overall auto market, offering affordable cars that leave even legacy automakers like Honda and Nissan struggling. Musk himself has praised Chinese automakers, saying they are “the most competitive car companies in the world.”
Partly to compete with Chinese automakers, Tesla has cut prices several times over the past year. Due in part to Tesla’s price decline, Hertz CEO Stephen Scherr told Bloomberg in January that the company plans to sell 20,000 electric vehicles, most of them Tesla.
Tesla’s fourth-quarter profit fell below analysts’ expectations and below operating income. drop by 47% a year before. The company also warned investors that “volume growth will be lower” next year as it focuses on a “next generation” vehicle that will be aimed at consumers on a budget.
Amid the lackluster results, some experts have suggested it may be time for Tesla’s board of directors to oust Musk from the top leadership. Musk, although a visionary entrepreneur, has taken some offense to Tesla for his abrasive behavior and reportedly demanding nature towards workers.
In January, Musk demanded 25% voice control of Tesla before continuing the company’s robotics and artificial intelligence development. The ultimatum was clear, given that Tesla’s monster valuation is at least partly based on hopes that Musk will eventually take the company beyond cars and turn it into a tech giant.
That promise hasn’t quite materialized yet, and yet Tesla has one of the highest price-to-earnings ratios among the Magnificent Seven stocks. Pressure is mounting on the company, with a leading analyst last week harshly describing Tesla as a “growth company with no growth.”
Tesla did not respond to a request for comment.