Elon Musk announced not to sell any more Tesla shares for 2 years

Elon Musk has just announced that he will not sell any more Tesla shares for the next 2 years, according to Bloomberg. It is known that this year alone, this billionaire has sold nearly $ 40 billion in electric car shares, mainly to finance the acquisition of Twitter.

“I probably won’t sell Tesla stock for the next two years. Definitely not next year in any case,” Musk said.

Reportedly, the largest electric vehicle manufacturer in the US is facing a difficult year-end period, while the goal of increasing the number of fast deliveries by 50% a year seems to have to be compromised. The reason is partly due to the fact that Tesla is having to reduce the selling price of some models even when input costs are high, thereby reducing profit margins. Before that, Musk also hinted a lot about headwinds that are out of control due to the Chinese real estate market and the story of the European energy crisis.

The first trouble of the quarter came after the company announced that the number of vehicles in excess of production had reached 22,000 units. Tesla then hastily changed its marketing strategy in China, in the context of fierce competition from domestic rivals putting the electric car company’s growth plan at risk.

Specifically, Tesla extended insurance benefits up to 8,000 yuan ($1,100) for new buyers, redeployed a user referral program and advertised products on a local TV shopping channel. This is said to be extremely rare, especially for a company that once boasted that there was no need for traditional advertising campaigns.

Elon Musk announced not to sell any more Tesla shares for 2 years

“Tesla is increasingly having a demand problem,” said Toni Sacconaghi, an analyst at Bernstein. He believes Tesla needs to lower prices further to stimulate Chinese consumer demand, along with cutting costs for some models to qualify for the US Inflation Reduction Act privilege.

According to Bloomberg, for the first time since November 2020, Tesla’s capitalization fell below the $500 billion mark after several sessions of shares sold off, despite previous commitments. Musk explained that he was forced to raise such a large amount of cash to prevent the “worst case scenario” from happening.

In a conversation on Twitter Spaces, Elon Musk said he favors buying back Tesla shares, only if the company is more confident in the direction of the economy. Suspicions that Musk is spending too much time on Twitter and neglecting the electric car company are also cleared by this billionaire.

“I haven’t missed any important Tesla meetings all this time,” Musk said, adding that Tesla is many times more complex than the social media company. He is now aiming to produce a “significant volume” of lithium within two years at a refinery under construction in Texas for use in electric vehicle batteries.

According to Bloomberg, Tesla itself still possesses enviable power, despite the difficulties of the past time. It is still considered the dominant global electric car company, with only eight days of inventory at the end of September. Furthermore, no other automaker is in a better position than Tesla to capitalize on. preferential tax credits for battery manufacturing and electric vehicle assembly.

Also, as a potential customer in a market rife with start-ups, Tesla can easily negotiate favorable terms, such as a long-term supply agreement for lithium prices. permanent.

According to Bloomberg, Tesla itself still possesses enviable power, despite the difficulties of the past time.

However, traditional automakers ramping up production of electric vehicles and worries about shortages of lithium are changing Tesla’s position. According to Chris Berry, president of House Mountain Partners, a metal battery consultancy, Musk’s lithium market leadership is rapidly evaporating as rivals “put money in guns and blow them up.” into the supply chain”.

Specifically, Ford in June signed an agreement with Liontown Resources to build a mine in Australia, including a $199 million loan from the carmaker on favorable terms. Livent Corp, a lithium producer, said in August that GM would pay $198 million in advance under a six-year agreement, starting in 2025.

Meanwhile, Tesla in October ended months of negotiations with mine developer Core Lithium in vain. This brand in 2020 also negotiated to acquire Cypress Development – an American project developer but failed to reach an agreement.

“Elon’s star power has reached its limit. Tesla may soon be like everyone else,” said Joe Lowry, founder of consulting firm Global Lithium LLC and former lithium industry CEO.

By: Bloomberg