Tesla loses its title as the most valuable carmaker in the US as its shares took a hit marking probably its worst week of the year to date.
The auto giant’s shares opened at $370.24 but went down by $317.26 on Thursday dropping about 14 percent this week corresponding to a $12 billion decline in stock market value.
What’s causing the drop?
Losses of Tesla mainly occurred this week ever since hitting the highest point of $383.45 or nearly $63 billion on its shares in June 23.
The California-based company lost 5.6 percent to its shares which significantly pulled down its market capitalization from $62.99 billion two weeks earlier to $50.7 billion placing the auto maker behind General Motors but still ahead of Ford.
Moreover, Tesla’s 22,000 deliveries of its Model S and Model X in the second quarter of this year were fewer when compared to its first quarter of 25,000 therefore failing to meet analysts’ forecast which resulted to lower expectations for year-end estimates.
Adding more pressure to its shares was Volvo’s announcement of making an all-electric lineup starting in 2019; the company then will not be selling vehicles with just gasoline or diesel engines but instead will offer hybrid, plug-in hybrid and complete electric vehicle (EV) models across its product line.
The Swedish auto maker’s statement jogged investors’ memory that Tesla would still be facing more competition in the EV industry and that it is no longer going to have the EV territory solely by itself.
Analyst Michelle Krebs said that the US car maker still has challenges ahead of it and that it will have to focus on quality over speed as they ramp up the Model 3, chief executive Elon Musk’s key player for his expansion goal.
However, Volvo refuses to be beaten with its statement to have five EV models in its lineup by 2021 and that all of its latest models will feature a hybrid or fully electric powertrains in 2019.
Other automobile manufacturers are stepping up their efforts to offer long-range EVs like that of Tesla’s and in some instances, they have surpassed Tesla to market.
Tesla has been chosen by South Australia in building what is believed to be the largest lithium ion battery in an effort to relieve the state’s energy problems.
Elon Musk made good on his promise to South Australia as Tesla will be teaming up with French electric utility company Neoen in making the battery with Hornsdale Wind Farm acting as its powerhouse for renewable energy.
A funding of AU$550 million ($417 million) will be provided by the South Australian Government to build the battery.
Tesla and Noeon will have 100 days to finish the battery that has a storage capacity of 100 megawatts or 129 megawatt-hours which is enough to light up 30,000 Australian homes.
The partnership will be known as the Hornsdale Power Reserve and will be South Australia’s biggest renewable generator in the state.
The move came as a response to the September 2016 state wide blackout after ruthless storms damaged power transmission lines across the state making South Australia’s Government to look for solutions to keep that kind of incident from happening again.