Tesla Is Down Bad Right Now

Photo: CFOTO/Future Publishing via Getty Images

Elon Musk’s debt-laden purchase of Twitter has been a bit of a mess — good for users who enjoy the chaos of a tanking platform, bad for the advertisers underwriting the thing and the thousands of its employees forced out by layoffs or absurd working conditions. But if you think Musk’s biggest current problems lie in getting the blue bird under his control, you’re forgetting about the scale of his chief business.

Musk bought Twitter for $44 billion in April. A few weeks before the purchase, his electric-car company, Tesla, had a market capitalization of almost $1.2 trillion. After a stock sell-off this week, one of many since the spring, Tesla is now valued at $527 billion. Because Musk owns roughly a quarter of the company, he has now lost $101 billion of his net worth this year alone. For those keeping score, that’s the value of more than two Twitter purchases. If the stock price keeps plummeting, Musk could soon lose his status as the world’s richest man.

Why is Tesla down so bad? One reason may be that traders fear Musk is too distracted by all the “dumb things” he promises to do at Twitter to effectively run a company with a higher market cap than Exxon Mobil. There’s the crummy market, of course. But there are also more tangible problems: Supply costs are up because of now-familiar problems, like supply-chain backups and China’s zero-COVID policy. Sales have been falling short of estimates because of inflation and rising interest rates bearing down on consumers. And Tesla’s lucrative sale of regulatory credits is also down, as other car companies break into the market.

Then there are the recalls. This week, Tesla announced a recall of 321,000 Model 3 sedans and Model Y SUVs, owing to tail lights that “intermittently illuminate.” In plainer language, they go off when they’re not supposed to. That comes on the heels of another recall involving 30,000 Model X luxury sedans, whose passenger airbags had the potential to deploy in minor collisions, when they weren’t supposed to. Now, those aren’t killers on their own: Both can be solved fairly easily by software patches. But there have been 17 other recalls this year — a concerning record for a company that is requesting takedowns of videos showing Teslas running over child mannequins.

Moving forward, Tesla could also take a hit if fit fails to meet its manufacturing targets for this year. Musk promised Tesla would build 1.5 million cars in 2022, but as of the end of the third quarter, it had built only 929,910. It will need to finish 570,000 vehicles in the fourth quarter, at a rate of more than 6,300 per day, or risk another stock dive.

A company losing more than half its valuation within a calendar year is pretty rough. But Tesla has a major debut coming up on December 1, when it delivers its long-awaited Semi model, selling the first round of the tractor-trailers to Pepsi. The first-ever electric long-haul truck, with a 500-mile range, could be a major boost for the company — assuming everything goes right this time.