Is the Saga of Tesla Coming to an End?

Billed as the Apple of auto- makers， Tesla Motors Inc. has always been a darling of the automotive media， constantly occupying the headlines. Back in 2003 when the EV automaker was established by Elon Musk and J.B. Straubel in California， no body knew it would become an auto industry disruptor.

Since in 2010 when Tesla made a debut on the Nasdaq stock exchange， shares of the EV automaker has already gone up tenfold， rising to over 200 dollars from the IPO price of 17 dollars. Given Tesla’s great performance in the stock market during the short span of four years， many call it as a Wall Street Cinderella story.

The Fading Luster of Tesla

However， in the recent months， some luster of Tesla seemed to have been rubbed off as it experienced a broad-based sell-off. Last year， Daimler and Toyota both unloaded Tesla shares. Even Tesla’s CEO Musk admitted the prospect of Tesla was not so bright.

At the 2015 Automotive News World Congress held in Detroit on Jan. 13， Musk said that the EV automaker would not make a profit until 2020， in addition to being frustrated by unexpected weak sales in China during the fourth quarter of last year， the world’s largest auto consumption market.

Predictably， shares of Tesla dived after his remarks at the congress， plummeting by13.75 dollars， or 7% to 190.22 dollars from 204.25 dollars in less than an hour. In contrast， over the course of last year， Tesla shares soared nearly 48%， with a record high of 279.20 dollars created on Sept. 7.

According to a shareholders’ proxy statement， Musk holds a 27% stake， or 350 million shares in Tesla， which means that his individual asset value vaporized 481 million dollars， or 3 billion yuan， in an hour after his remarks.

Different from many other executives， Musk is an overly honest man who never hides his downbeat thoughts or expectations over his company， even though it would be flowed by a slump in Tesla shares.

A similar situation happened last year. In September 2014， after announcing that Nevada would be home to the 5-billion-dollar lithium-ion battery plant dubbed Gigafactory， Musk publicly admitted that Tesla shares may be overvalued. Expectably， a drop in Tesla shares ensued after his overly candid remarks.

Many stock analysts still insist the current high price of Tesla’s shares has overdrawn its future performance.

Tesla’s Wild Card

Musk viewed the Chinese market as a wild card for the future of Tesla. According to a previous report in 2013， Musk placed great hopes on the Chinese market， believing it would soon overtake the United States as the largest single market for Tesla， contributing one third of its global sales.

However， the wild card seemed to be hard to grasp for the EV automaker and Musk. Tesla’s expansion in China was not going smoothly as expected， with delays in vehicle delivery and a slower-than-expected construction speed of outlets. In addition， Tesla also faced low growth in sales and excess inventory.

Besides， at the end of last year， Veronica Wu， vice president of Tesla China operations， resigned after serving at the post for only nine months and was replaced by Zhu Xiaotong， director of Tesla China supercharging station project. The personnel change was also viewed as a reflection of Tesla’s poor performance in China.

In the first nine months of last year， Tesla only delivered 3，500 new vehicles. Based on the data and Musk’s remark about lower-than-expected sales in the four quarter， the all-electric automaker undoubtedly misses sales target of 5，000 vehicles for the full year of 2014.

Though sales in China just make up a small part of Tesla’s global sales， giving up the world’s largest market is the last thing Musk want to do.

This time， Musk attributed the lackluster sales in China during the last quarter of 2014 to the misperceptions among Chinese consumers， who viewed the electric vehicle charging as an intractable hurdle. He hopefully said the EV automaker would resolve the issue in China and probably get back into good shape by the middle of this year.

By far， Tesla has established 9 experience and service centers across major cities， including Shanghai， Beijing， Hangzhou， Shenzhen， Chengdu and Xi’an， as well as 50 supercharging stations across 20 cities and more than destination charging piles across 70 cities.

However， the Chinese consumers still doubt whether there are enough charging stations to recharge the Model S in China. If Tesla wants to achieve its expansion target in the country， it should first help Model S potential buyers ease the misgivings.

Apart from China， Tesla also saw demand slowing down in the European market. In the second quarter of last year， Tesla’s sales in Norway， its fastgrowing market in the region， plummeted 47.4%. Even in its local market， the United States， the electric automaker’s sales in 2014 totaled 17，300， well below those of Nissan Leaf.