After three months as the nation’s most valuable automaker, a bad week in an otherwise stellar year has knocked Tesla from the top perch.
Over the first six months of the year, Tesla shares gained more than 50 per cent and the electric car company passed General Motors and Ford in market cap. But shares have plunged almost 15 per cent this week, translating to lost market value of $8.7 billion.
GM has regained the top spot with a value of $52.67 billion compared with $50.74 billion for Tesla.
Tesla has been hit by a trifecta of bad news, starting with a tweet from Tesla CEO Elon Musk. Shares are on track for their worst weekly percentage decline since early 2016 – they fell nearly 6 per cent Thursday alone.
On Monday, Musk sent out a tweet saying that the Palo Alto, California, company anticipates production of 20,000 Model 3 cars per month in December, which was below previous estimates. Tesla also said Monday that first-half deliveries of the Model S sedan and Model X SUV totalled about 47,100, at the low end of the company’s projections.
Then on Wednesday, the dynamics of the electric car market shifted a bit when Volvo announced that by 2019, it would be producing only electric and hybrid vehicles, the first traditional automaker to make that leap. Volvo, owned by Chinese firm Geely, will launch five fully electric cars between 2019 and 2021. Three of them will be Volvo models and two will be electrified cars from Polestar, Volvo Cars’ performance car arm.
General Motors is already selling the Chevrolet Bolt, and Audi plans to introduce an electric SUV next year.
On Thursday, the Insurance Institute for Highway Safety said that while Tesla’s Model S received an acceptable rating in its small overlap front test, it did not get the Top Safety Pick+ rating that the Lincoln Continental, Mercedes-Benz E-Class and Toyota Avalon received. Overlap front tests gauge the safety of those inside the car when the front driver-side corner of a vehicle hits a tree or utility pole, or collides with another vehicle.
The IIHS said that the main issue with the Model S performance was that the safety belt allowed the torso of crash dummies to move too far forward, allowing the head to strike the steering wheel hard through the air bag. IIHS said Tesla modified the vehicle and they retested it, but the same thing happened again.
Tesla said Thursday that the carmaker’s rating for the small overlap front crash test was the second-highest rating available and that the company received the highest rating in the rest of IIHS’s crash testing categories. A Tesla spokesperson maintained that “the most objective and accurate independent testing of vehicle safety is currently done by the U.S. government, which found Model S and Model X to be the two cars with the lowest probability of injury of any cars that it has ever tested.”
Tesla’s gains this year are still noteworthy. The shares are still up more than 40 per cent. GM shares gained about 2 per cent in the same period, while Ford’s have declined.