Tesla Faces Strong Headwinds, But Remains Worth Watching

$Tesla(TSLA.US) Tesla’s share price saw its third consecutive day of decline on August 29, slipping by 3.50%. Over the past three days, the stock has fallen a total of 5.06%, sparking widespread market attention and prompting investors to search for underlying causes.

Recently, Tesla has faced a series of challenges. A high-profile lawsuit saw the company ordered to pay US$242.5 million in damages related to a fatal accident involving its autonomous driving system. Tesla has lodged an appeal to overturn or reduce the compensation, with its legal team arguing the driver, not the company, should be responsible. Nonetheless, the outcome of this case may have lasting implications for Tesla’s brand reputation and consumer confidence.

At the same time, Tesla is struggling in the European market, where July sales plunged 42%. In contrast, BYD, China’s leading competitor, achieved a 225% sales surge over the same period. Tesla is attempting to reverse this trend with the launch of the new Model Y Performance, though it remains to be seen whether this will successfully revitalise sales. Additionally, CEO Elon Musk’s outspoken political views have also influenced public perception of the brand.

Despite these hurdles, Tesla continues to innovate. The new Model Y Performance has recently hit the European market, with plans to expand to the US. This model promises impressive acceleration and driving range, aiming to attract new customers. However, Tesla’s full self-driving technology still faces strict scrutiny from EU regulators, which has limited the deployment of its core capabilities.

Globally, Tesla is experiencing fierce competition. BYD outperformed Tesla in both revenue and net profit for the first half of the year, while its influence in the international market continues to grow. BYD’s success is underpinned by increased investment in R&D and the rollout of new, innovative models, solidifying its strength in the electric vehicle sector.