Why has Tesla been continuously declining recently?

In the stock market, there are no stocks that only rise without falling, nor are there stocks that only fall without rising. After a strong upward trend, Tesla now also needs to take a break. Tesla has recently experienced a continuous decline; let's take a look at the factors influencing this:

1. Market sentiment is low

• Year-end investor sentiment is generally low: As the year-end approaches, investor sentiment is generally low. Among the components of the Dow Jones Industrial Average, all but Nvidia have seen declines, and this overall low market sentiment has also affected Tesla.

• Concerns about interest rate cuts: Investors are worried that the Federal Reserve's interest rate cuts in 2025 may not meet expectations. Lower interest rates are beneficial for promoting economic growth and making new car purchases more affordable. If the interest rate cuts do not meet expectations, it will cause investors to worry about the prospects of the automotive industry, including Tesla.

• Concerns about overvaluation due to target price gaps: According to FactSet data, analysts have an average target price of about $296 for Tesla's stock, which is far below the current stock price. This gap may raise concerns among investors about whether the stock price is overvalued, leading to sell-off behavior.

2. Concerns about stagnation in sales growth

• Overall delivery volume growth stagnation: Analysts expect Tesla's total delivery volume in the fourth quarter of 2024 to be about 510,000 units, slightly below the company's target of 515,000 units, and the total delivery volume for 2024 is expected to be about 1.8 million units, flat compared to 2023, indicating stagnation in growth.

• Decline in sales in major markets: According to estimates from Cox Automotive, Tesla's sales in the U.S. are expected to decline by about 6% in 2024, reaching 633,000 units, accounting for 4% of the entire automotive market, with sales in the EU and China also expected to decline.

3. Market share facing challenges: As other automakers launch more electric vehicle models, Tesla inevitably loses some market share, facing competition from BYD in China, challenges from Volkswagen and BMW in Europe, and competitors like General Motors and Ford in the U.S. The global electric vehicle market has grown by 25% year-on-year as of November, but Tesla's sales are declining.

4. Slow introduction of new models and the need for time to implement autonomous driving

• Slow introduction of new models: Aside from the Cybertruck, Tesla has not launched any new models since the Model Y was introduced in 2020. The $25,000 low-cost model that investors are looking forward to has not yet had a prototype shown or more related information disclosed by the company.

• Slow implementation of autonomous driving: Investors have high expectations for Tesla's progress in the field of autonomous driving, but most analysts believe that widespread use of autonomous taxis will still take several years, which has lowered investors' expectations for Tesla's future performance growth.

I believe that although Tesla's stock price has seen a significant pullback at the year-end, there is still a great opportunity to catch up after the subsequent products (such as low-cost models, Robotaxi, humanoid robots, etc.) are gradually released.

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