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Despite Tesla’s Wild Stock Surge, Musk Turns to Discounts to Juice Sliding Sales
Tesla CEO Elon Musk has been touting a remarkable stock surge over the past few weeks, with shares soaring nearly 20% since the company reported its quarterly earnings. However, behind the scenes, Musk is taking steps to boost sales by offering discounts and incentives.
Analysts say this approach may be necessary as Tesla’s market share of electric vehicle (EV) sales in the US declines dramatically. According to Cox Automotive, which tracks auto industry data, Tesla’s US market share will fall from 80% in 2020 to less than 50% this year due to increased competition.
“We are seeing a significant shift away from Tesla,” said Jonathan Smoke, chief economist at Cox Automotive. “The decline is not just about the rise of other EV brands like Hyundai and GM, but also consumer preferences shifting towards other options.”
Musk has acknowledged this shift by announcing discounts on new vehicles and lease offers to stimulate demand. However, these measures may not be enough to stem the tide.
“We are still cautious on Tesla’s sales trajectory,” said Baird equity analyst Ben Kallo. “The company needs to execute on its promised affordable vehicles to remain competitive.”
Discounts and incentives aside, one of the biggest hurdles for Tesla is its lack of new vehicle offerings in recent years. While Hyundai and other competitors have launched a wide range of new EV models, Tesla’s lineup remains largely unchanged since 2017.
Musk has vowed to change this by releasing more affordable vehicles starting in the first half of 2025. However, his comments have been contradictory, with some suggesting he may not be planning to release a budget-friendly model at all.
“New vehicle sales will continue to rise with market share expected to tip over 10%,” said Stephanie Valdez Streaty, Cox Automotive’s director of Industry Insights. “The overall pace of US EV sales slowed a bit in 2024, but we expect the trend to resume next year.”
While Tesla’s stock price may be surging, its sales trajectory remains uncertain due to these market challenges.
Disclaimer: The views expressed are those of the author and not necessarily those of Forbes or this publication.
Source: www.forbes.com
