Is the Tesla trend about to lose power forever?
By Paul Reid
Elon Musk’s Tesla is making headlines once again with its recent announcement of significant price increases for all vehicle models in Canada. This move has raised eyebrows among consumers and investors alike, prompting discussions about the implications for Tesla's future and its stock performance.
Tesla's Q4 2024 earnings report
Tesla's latest earnings report showed a mixed performance. The company reported an earnings per share (EPS) of $0.73 (USD), which was below the expected $0.76. Revenue came in at $25.7 billion, falling short of the anticipated $27.61 billion. This indicates a slowdown compared to previous periods. And with vehicle deliveries falling 22,000 units short of the forecasted 517,000, we could be seeing early signs of a forming long-term bearish trend.
Behind the price increases
By raising the price of the Tesla models, the company’s net profitability should, in theory, rise. Such a key change in the market dynamic could inspire investors to reap the rewards, but before you hit the TSLA buy button, consider the bigger picture.
Effective February 1, 2025, Tesla will implement price hikes of up to C$9,000 (approximately $6,200 USD) for the Model 3, while the Model Y, S, and X will see increases of up to C$4,000 each. This decision has the potential to affect consumer demand significantly, but not in a good way.
In 2023 and 2024, Tesla sold around 45,000 vehicles to Canada alone. Is that number about to fall? With prices already at a premium, these increases may push some models out of reach for middle-income buyers, especially in a price-sensitive market like Canada. The previous price adjustments disqualified some models from federal EV rebates, and the new hikes could further alienate potential buyers who might turn to more affordable alternatives.
Such price hikes can create negative sentiment among potential buyers who may feel that Tesla is becoming less accessible. If market sentiment perceives this with a negative tone, big investors may pull out of TSLA in favor of other investments that better align with Trump’s policies and goals of a self-sufficient America.
Then there are Tesla’s reliability issues, computer glitches, and explosive battery incidents that have been surfacing since the EV introduction in 2008. It appears that Tesla cars might not stand up to the test of time, making Tesla cars a risky investment… which might eventually translate to the stock–if there are no technological leaps around the corner.
Range anxiety: A growing concern
In addition to pricing issues, range anxiety remains a significant barrier for many car consumers considering an EV. Hertz, the car rental giant, is already selling around 20,000 electric vehicles from its US fleet, which includes a significant number of Tesla models. This decision is primarily driven by higher costs associated with collision and damage repairs for EVs compared to gasoline vehicles, prompting Hertz to shift its focus back to gas-powered cars.
Moreover, Hertz is facing significant Tesla car value depreciations of up to 25% within the first year, estimated to cost Hertz around $245 million so far. EVs are famous for losing range over time, and as more older models lose range, more negative opinions will surface. Yes, all cars are known for used-market depreciation, but Tesla is higher than all the top selling combustion alternatives at 25% in the first year.
In recent years, Hertz has observed lower-than-expected customer demand for EVs. Fewer people are choosing to rent Tesla, year-by-year, which can be a strong indicator of public perception that might translate to a buyer’s market forecast.
Dwindling battery materials: A looming challenge
And the bad news for Tesla keeps coming. The common availability of charging stations is crucial for alleviating range anxiety. Many drivers worry about finding charging points during long trips. Newer EVs come equipped with advanced navigation systems that help ease range anxiety by providing real-time data on charging station locations, but many users are reporting waiting lines in major cities, and with each vehicle needing up to 80 minutes to fully charge, future Tesla drivers may need to take a day off just to charge up.
As demand for EV batteries continues to surge, concerns about the availability of materials needed for battery production are becoming increasingly critical. The demand for key battery materials—lithium, nickel, cobalt, and graphite—is expected to grow significantly. By 2030, global demand for lithium-ion batteries could reach approximately 4,500 GWh annually.
And with geopolitical tensions and environmental regulations contributing to a tight supply situation, recycling is becoming essential for reclaiming valuable materials and reducing environmental impacts associated with mining.
Environmental impact: The break-even point
Reports suggest that the environmental cost of building EVs means they must run for as long as ten years to break even with conventional combustion cars–in terms of overall emissions.
Producing an electric vehicle generates significantly more greenhouse gases than producing an ICE vehicle. Studies indicate that EVs need to be driven for approximately 8-10 years to offset these higher initial emissions through their lower operational emissions.
Mining and processing materials for batteries are resource-intensive and contribute significantly to habitat destruction and water pollution. In other words, Tesla cars are not friendly for the environment. Another negative for Tesla.
Market sentiment and stock performance
Given these challenges, concerns about Tesla's future have led some investors to speculate on the potential decline of TSLA stock. Tesla's stock has dropped approximately 18% from its peak in December 2024 due to missed annual delivery targets and rising competition in the EV market.
While some analysts maintain a bullish outlook—like Wedbush Securities predicting a price target of $515—others express skepticism about Tesla's ambitious sales targets and high valuation relative to earnings.
Conclusion
Tesla faces rising prices, environmental concerns related to battery production, dwindling material supplies, and market competition. Elon Musk may have an alliance with the Trump administration, but it should be noted that the US is doubling down on fossil fuel extraction. A USOIL supply increase could lower the price of fuel at the pumps and consumers already struggling financially may soon see an electric car as a passing fad.
Unless a new groundbreaking technology for portable power energies emerges, it might be the end of the road for Tesla. Open a TSLA chart on your risk-free demo account to test the theory, and stay tuned to the Exness blog for further updates.
This is not investment advice. Past performance is not an indication of future results. Your capital is at risk, please trade responsibly.
Author:
Paul Reid
Paul Reid is a financial journalist dedicated to uncovering hidden fundamental connections that can give traders an advantage. Focusing primarily on the stock market, Paul's instincts for identifying major company shifts is well established from following the financial markets for over a decade.