Tesla (TSLA -3.65%) investors have had a tough start to 2024. The stock is down nearly 30% year to date, though returns more than doubled in 2023. But in the past several weeks, news has continued to accumulate that has investors taking profits from last year and sitting on the sidelines.
Shares tumbled again today by as much as 7%. As of 12:30 p.m. ET, Tesla stock was still lower by 3.8% to start this week’s trading.
Cold, rain, and snow (and EVs)
It hasn’t just been profit taking that has led to investors selling Tesla stock this year. Several other things have snowballed that have put Tesla’s future prospects into question. Against a backdrop of multiple examples of extreme weather that have exacerbated consumers’ concerns with owning an electric vehicle (EV), the company itself has been under fire.
Last week a Delaware judge ruled against the company in a lawsuit that has now voided CEO Elon Musk’s lucrative pay package that was approved in 2018. A shareholder sued the company contending that the nearly $56 billion pay package wasn’t fairly presented to investors and that Tesla’s board of directors didn’t act independently as it should.
But the decline in the share price may be more from two major weather events that have brought news coverage that highlights some concerns with owning an EV. Many consumers have yet to experience driving one, or even knowing an owner. So when a deep freeze hit the Midwest last month and Chicago-area Tesla owners couldn’t charge batteries in weather with temperatures well below zero, some sector watchers thought that might push back the pace of EV adoption. Now an ongoing major weather event in Southern California has caused power outages that will leave some EV owners without the ability to charge their vehicles.
EV adoption could suffer
The truth is these weather events are uncommon, and there are things all vehicle owners can do to prepare. But there is a learning curve with a new technology like electric cars, and many people who haven’t been ready to try one may be even more uncomfortable seeing these challenges caused by extreme weather.
The irony, of course, is that Elon Musk’s vision is to grow electric vehicle use to help stem impacts of climate change. But Musk’s credibility has taken a hit with news that his board of directors is working at his beck and call. There will be more to come related to the lawsuit on Musk’s pay package. But some investors are seeing a potential slowdown in EV adoption as a reason to sell Tesla stock now.
