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Tesla Tumbles Into Bear Market - Loses Crown As Biggest US Automaker

On April 10th 2017, Tesla market cap surpassed General Motors for the first time in history. In mid-June, Tesla was valued more than $11bn above GM... but that has all gone now.

As The FT reports, Tesla bulls were delivered a few setbacks this week, which overshadowed news that its eagerly anticipated mass market Model 3 will launch at the end of the month. 

Volvo, owned by China’s Geely Automobile Holdings, spooked Tesla bulls after it said on Wednesday that it would stop manufacturing combustion engine-only vehicles by 2019 and would only produce hybrids or battery-powered vehicles afterwards. The company also said that it would launch five fully electric cars between 2019 and 2021, three under the Volvo brand and two under the Polestar performance brand.

 

“No doubt the Tesla true believers will see this as good news, as it appears to validate Tesla CEO Elon Musk’s vision of a future of sustainable, electric transportation,” analysts at Barclays noted. “But we see it – especially after a visit to China last week – as more evidence for our ‘red-pill’/hard reality case that Tesla will face intense competition by next decade from legacy OEM’s [original equipment manufacturers] who are expanding their electric options.”  

 

Moreover, they argue that Tesla will have a difficult time in China, where plug-in hybrids and low-end electric cars are “vastly more popular than Tesla” and where regulations favour local companies.  

 

The Volvo news compounded blows to Tesla’s shares that had begun earlier in the week following news that deliveries of its Model S sedan and Model X SUV met just the lower end of its guidance — for deliveries of between 47,000 to 50,000 in the first half of the year.     That caused analyst to worry that demand for Tesla’s company’s Model S and Model X SUV’s is plateauing.

And adding that all up, Tesla is now smaller than GM once again...

 

This is the biggest drop since Feb 2016...

Today's small bounce in the early afternoon was somewhat mocking as the machines reversed at exactly a 19.99% drop from the highs... Can't allow a bear market! But that did not last...

Selling pressure resumed this afternoon, pushing TSLA down over 20% from its highs just a few short 'no brainer' days ago.