Tesla Crisis Theory? Will it start this year?

Tesla Crisis Theory? Will it start this year? On January 19, 2024, the CEO of Stellantis used the word “Bloodbath.”

Currently, major electric car makers around the world are embracing inventory (four months as of the end of 2023) that exceeds the normal level (about 2-3 months). As inventory of final products increases, prices of raw materials for electric vehicles such as lithium are also falling.

Tesla, the most profitable electric car company, is leading price cuts in line with this. The same applies to other companies. Rather than suffering losses due to inventory losses while embracing increasing inventory, they are choosing to give up profitability through price cuts and reduce bad inventory. The idea is to sell it even if it’s $7,500 off later.

In other words, the company has given up on profitability. It seems that CEOs of electric car companies consider the current market situation much more reasonable than financial market investors. Aren’t they the ones who suffered all sorts of industrial accidents, including bankruptcy following the 2008 global financial crisis?

All problems will be solved neatly if demand for electric vehicles picks up in line with price cuts as electric car manufacturers calculate in the future. You can handle inventory and earn profits by creeping up the price of new cars as they continue to release them.

The problem is that despite price cuts, sales continue to remain sluggish. That’s when things get serious. Many will be asking to skim over the January-February electric vehicle sales figures, which will be released in February and March, with excuses such as “the freezing cold in the United States, Chinese New Year,” and more. Indeed, I think we’ll skim over it.

However, if the sales slump continues until April-May this year, it will be a situation where “white pills are invalid.”