Tesla Motors Inc (NASDAQ:TSLA) shares declined up to 8 percent, or as low as $188 per share, in after-hours trading on Tuesday, following announcement of weak performance in China by Tesla CEO Elon Musk. Speaking at the Automotive News World Congress in Detroit, Musk said that sales figures in China was lower than expected. He cited consumers’ concerns on charging as the reason for the weak sales. Tesla started delivering its Model S sedans in China in May of last year, and Musk expressed interest in manufacturing cars in the country in three to four years time.
The electric car maker’s stock is now floating at about $200 per share, declining as much as 30 percent after hitting an all-time high of $300 per share by September of last year. With oil prices steadily declining, and with no signs yet that oil prices will go up at a definite time in the future, Tesla Motors Inc (NASDAQ:TSLA) stocks also fell, with investors worrying that low oil prices will adversely affect the market for electric cars. Tesla currently sells it Model S for about $70,000, and it is the only vehicle available from the company so far.
While Tesla Motors Inc (NASDAQ:TSLA) have plans of coming up with a more affordable car in its Model III which is tentatively scheduled to be released at an estimated price tag of $35,000 by 2017, a low oil price on the horizon will still not make it a practical choice for majority of consumers as compared to traditional gas vehicles. It may also have to contend with competition from a new electric car announced by General Motors Company (NYSE:GM) at the 2015 North American International Auto Show in Detroit. GM’s new electric car, called Bolt, will come to the market at a price tag of about $30,000.
CEO Elon Musk hinted that Tesla Motors Inc (NASDAQ:TSLA) is not after immediate profits as the company is still investing in growth and new car models. “I expect we’ll achieve profitability in 2020,” Musk said, quoted by Businessweek, noting the company will be profitable on an adjusted basis by that time if sales reach at least 500,000 cars a year. Tesla expects to be able to produce half a billion cars annually by that time frame, and a billion annually by 2025. Tesla is expected to report quarterly results by February of this year, although no official date for the report has been announced yet. Its stock was up 1 percent by Tuesday’s close, recording an annual gain of 46 percent, as against 11 percent gains for the S&P 500 Index.
This article has been written by Nonito Guntan.