Tesla merges into slower lane



NEW YORK (Reuters Breakingviews) - Tesla made its name – and its once-$1 trillion valuation – by proving skeptics of its manufacturing prowess wrong. The question now is whether there’s enough demand to keep boss Elon Musk’s electric-vehicle assembly line busy. Though it is growing sales at a decent clip, a widening gap between the number of cars Tesla makes and delivers to customers is a fresh sign that the company, now worth just $370 billion, might not be able to race ahead of the pack forever.

Fourth-quarter deliveries grew nearly a third year-over-year, to 405,278, 6% below what analysts had forecast, according to Refinitiv. Worse, even discounts couldn’t bridge sales to meet production levels. The shares fell 6% early on Tuesday, after a 66% collapse last year.

Tesla’s tumbling valuation already implied that the market doesn’t expect Musk to achieve his wildest ambitions, which include selling twice as many cars annually as global leader Toyota Motor. Competition in the United States and China, along with rising interest rates, also suggest Tesla is no longer unique. Musk cracked the electric-vehicle formula, but he’s stuck with the realities of the automotive market. (By Jonathan Guilford)

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(Editing by Jeffrey Goldfarb and Amanda Gomez)

The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.


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