is tesla a good stock to buy

Is Tesla a good stock to buy?

What drove the massive drop in its share price?

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Elon Musk’s distractions and controversies

Elon musk tesla stock

Stalling production and recalls

Production is no longer growing at the breakneck pace seen between 2021 and 2023 when Tesla grew its production from 936,000 vehicles to 1.85 million vehicles. In 2024, production may actually fail to grow year on year. The projected figure of 2 million vehicles will be hard to reach given major production issues at some of Tesla’s sites, such as in Berlin, Germany.

In December 2023, Tesla announced its largest-ever-recall covering 2.03 million vehicles – or nearly all of its vehicles on US roads. The recall covers models Y, X, S, 3 and Cybertruck vehicles in the U.S. equipped with Autopilot produced between the 2012 and 2024 model years.

Falling demand and sales

Tesla has faced declining demand for its electric vehicles, both in the U.S. and internationally. Sales have been particularly challenging in China, Tesla’s second biggest market, where competition from local manufacturers like BYD, NIO and Xpeng has intensified. In Q1 of 2024, Tesla’s deliveries were actually down nearly 9% year on year.

Overall market demand for electric vehicles has slowed due to continued high vehicle prices and a limited number of lower cost options.

Tesla stock price drop

Slowdown in revenue growth

Tesla’s revenue is further hampered by significant price cuts throughout 2023 and into 2024 to stimulate demand and maintain market share in the electric vehicle (EV) market. These reductions have been substantial, with prices for some models cut by tens of thousands of dollars compared to the previous year. In some markets, the Model S and Model X experienced price cuts of 15-19%.

Margin erosion

Tesla net profit margin

Falling profitability

Tesla stock valuation

Tesla valuation versus peers

In conclusion, is Tesla a good stock to buy?

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