Here’s Why Dogefather’s Tesla Is Down 27 Percent So Far in 2024, Yet Dogecoin (DOGE) Is up 100 Percent

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Gone are the days when Elon Musk – the erstwhile Dogefather – could add billions of dollars in new market capitalization to either Tesla or Dogecoin by simply stringing together a few words in a post on X. Now, Elon Musk hardly ever spares a thought to Dogecoin even though it is currently rocketing – as the broader crypto space catches a robust tailwind from Bitcoin’s strength – while focusing all of his energies on Tesla, which continues to struggle despite the mega-billionaire throwing everything, including the proverbial kitchen sink, at its persistent anemic demand problem.

The Weak Demand for Tesla’s EVs

While announcing its earnings for the fourth quarter of 2023, Tesla announced that the growth rate of its EV deliveries in 2024 would be “notably lower” than the 38 percent year-over-year increase recorded in FY 2023. Wall Street currently expects the EV giant to record a growth of just 16 percent in its annual deliveries. Even so, there are indications that Tesla’s sales in the first quarter of 2024 will fail to meet consensus expectations of 475,000 units, with the full year managing to record a sales growth of just 10 percent – a number that does not befit a company that is supposedly in a hyper-growth stage.

First, the sale of China-made Tesla EVs plunged for the second month in a row in February to just 60,365 units, corresponding to a year-over-year decrease of 18.87 percent. While the Chinese New Year likely played a role, the sales figure missed Wall Street’s consensus expectations that had already factored in the holiday-related lull.

Next, Tesla is also expected to report a negative annual growth in sales for Europe. Critically, this was before a damaging arson incident at Giga Berlin that has now halted production for the next few days, with repairs expected to cost around $100 million euros.

This arson attack could not have come at a worse time for Tesla, and Elon Musk appears visibly miffed, having labeled the perpetrators as the “dumbest eco-terrorists on Earth.”

What is Tesla Doing to Counter This Demand Weakness?

Not much, frankly speaking. In order to get rid of elevated inventories at Giga Shanghai, the EV giant is now offering incentives worth $4,807 to buyers of the Model 3 sedan or the Model Y SUV.

Meanwhile, to partially counter the hit to its margins, Tesla has raised the price of the Model Y LR by $1,000 in the US.

The company is also offering 5,000 free supercharging miles to customers in the US who buy a new Tesla vehicle by the 31st of January, 2024.

Finally, with the Cybertruck expected to enter volume production only in 2025, Elon Musk is trying to do what he usually excels at: generating hype-based diversion. The CEO of Tesla has now started to focus on the long-delayed Roadster EV after the Optimus Robot pump apparently ran its course. As per Musk’s stated timeline, the newest Tesla product will be unveiled in 2024 and enter production in 2025.

Wall Street’s Take

Goldman Sachs has shed light on Tesla’s travails in a new investment note, painting the company’s current strategy of resorting to margin-destroying price cuts to juice up demand in less than stellar light:

“While our analysis shows that a 1% price reduction generally correlates to a low single digit increase in volume in the mainstream part of the market, we estimate that incremental broad-based price cuts to Model 3/Y would be negative to profit dollars at least in the short-term.”

Tesla’s woes are multi-faceted, stemming from a decreasing hype around its products, a phenomenal increase in competition in China, and a growing shift in the behavior of consumers toward hybrids instead of EVs.

For its part, Tesla has tried to pin the blame on everything from the high interest rates to fickle consumers, but the fact remains that the company is in a dire need of a deep introspection.

After all, when Tesla is down 27 percent so far in 2024 and Dogecoin is up 100 percent, clear idiosyncratic shortcomings are likely involved.

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