Elon Musk’s Halloween Scare: Personal wealth nosedives by $41 bn as EV sales tank in the US

Elon Musk took another big hit to his wealth on October 30, just before Halloween, and it’s like adding a spooky twist to the already scary news for electric vehicles.

By 2:15 PM, Tesla’s stock had dropped from $207 to $197, a 5 per cent decrease, causing Elon Musk’s holdings to lose a staggering $7 billion in just under five hours of trading. This decline comes on top of a sharp drop that began when Musk announced disappointing Q3 earnings and a gloomy outlook on October 17. Since that date, Tesla’s shares have plummeted by 23 per cent, wiping out $189 billion in market value and taking a $41 billion bite out of the world’s wealthiest person’s fortune.

It’s not entirely clear what caused this dramatic one-day decline, but an announcement from Panasonic, Tesla’s major battery supplier, reducing production due to weaker EV demand could be a contributing factor. Alternatively, the market might be reevaluating Tesla as more of a traditional car manufacturer rather than the tech wonder Musk has long championed with software-like profit margins. Tesla’s Q3 numbers and Musk’s pessimistic comments indicate that profitability is moving more in line with other automakers and not reaching the lofty heights Musk has promised.

In the third quarter, Tesla’s operating margins, excluding environmental credits, dropped to just 5.3 per cent, down from 16.1 per cent in the same period last year. Even Musk seemed less enthusiastic, admitting that their upcoming cyber truck is proving to be extremely costly and complex to build, and he doesn’t foresee margins bouncing back, especially with rising interest rates. To keep monthly payments affordable and maintain high sales volumes, Tesla is resorting to price discounts.

While Tesla is slashing prices, GM and Ford are scaling back their electric vehicle plans. GM delayed the production of electric pickup trucks and lowered its EV sales projections. Ford, on the other hand, is facing challenges with its first-generation EVs and substantial losses in the electric segment. The pressure from increased labour costs and uncertainty about their EV investments has led Ford to delay $12 billion in electric vehicle spending. Both automakers are realizing that customers are not willing to pay a premium for EVs over traditional gas or hybrid vehicles, and the high production costs are causing concerns.

In essence, the future of electric vehicles doesn’t look as bright as it once did, and Elon Musk’s Halloween season is turning out to be more like a spooky nightmare than a treat.