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The Rise and Fall of Tesla Stock: An In-Depth Look at Elon Musk and the Electric Vehicle Industry

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How Elon Musk & Tesla Stock Continue to Go Up and Down

Elon Musk is one of the most well-known entrepreneurs and innovators of the 21st century. As the CEO of Tesla, SpaceX, Neuralink, and The Boring Company, Musk has made headlines for his ambitious goals and unprecedented success in multiple high-tech industries. However, no company has attracted more attention than Tesla, the world’s leading producer of electric vehicles and energy storage systems.

Tesla’s stock price has seen extreme volatility over the past decade, with rapid rises and sharp declines. This article takes an in-depth look at the factors driving Tesla’s stock price fluctuations, Musk’s leadership, the competitive EV market, and predictions for Tesla’s future valuation.

The Early Years: Tesla Motors Founded in 2003

Tesla Motors was incorporated in July 2003 by Martin Eberhard and Marc Tarpenning, who aimed to commercialize electric vehicles using lithium-ion battery cells. Elon Musk led the Series A funding round in 2004 and became chairman of the board. He took an active role in the company and oversaw Roadster product design at a detailed level, but was not yet CEO.

In those early days, Tesla focused on building sports cars like the Tesla Roadster to demonstrate electric vehicle viability and promote widespread EV adoption. Though production volumes were low, the futuristic Roadster generated excitement and put Tesla on the map in the automotive industry.

Elon Musk Takes the Reins

Elon Musk took over as CEO in 2008 following some production delays and financial concerns. He invested heavily in Tesla with his personal fortune and orchestrated a successful IPO in June 2010 that raised $226 million for the company.

This allowed Tesla to open its first assembly factory in Fremont, California and launch production of the Model S sedan. The Model S received rave reviews for its performance and design, winning multiple awards and establishing Tesla as a leader in EV innovation.

Ramping Up Production

In order to achieve Musk’s bold vision of mass EV adoption, Tesla needed to ramp up production with affordable vehicle options. The Model 3 was unveiled in 2016 as Tesla’s first mass-market model starting under $40,000.

Over 400,000 reservations were placed before production even began. While Tesla struggled initially to meet production targets for the Model 3, the company ultimately overcame manufacturing challenges. The Model 3 became the world’s best-selling EV in 2020.

An Unorthodox CEO

Elon Musk is widely seen as an eccentric visionary. He has drawn frequent criticism for unconventional actions as Tesla’s CEO. Some examples include:

  • Smoking marijuana on a live podcast
  • Calling a rescue diver a “pedo guy” on Twitter
  • Making controversial comments about COVID-19 pandemic restrictions

Musk’s behavior has caused turmoil at times. But it has also strengthened his personal brand and reputation as an outspoken innovator not afraid to ruffle feathers in pursuing his ambitions.

The Rise and Fall of Tesla Stock

Tesla stock went public on June 29, 2010 at an opening price of $17 per share. The stock price languished for several years and did not trade above the IPO price until 2013. But Tesla’s valuation has since skyrocketed to incredible heights thanks to execution on production goals, strong revenue growth, and belief in the company’s market opportunity.

Some key dates:

  • June 2014 – Tesla stock closes above $200 for the first time
  • April 2017 – Tesla becomes America's most valuable automaker, surpassing Ford and GM
  • December 2020 – Tesla joins the S&P 500 and stock hits split-adjusted high of $883 per share
  • November 2021 – Market cap exceeds $1 trillion for the first time

This meteoric stock price rise resulted in Tesla becoming one of the most valuable companies on Earth. But Tesla’s share price has fallen substantially from its late 2021 peak amid broader stock market turmoil. Concerns around production costs, competition, legal issues, and Twitter buyout controversy have rattled investor confidence.

After hovering above $1,000 for much of 2021, Tesla stock dropped below $700 in May 2022 and has traded around $200 in recent months. The stock remains highly volatile as the company’s future remains uncertain.

Factors Driving Recent Stock Declines

Why has Tesla’s stock cratered after years of astounding growth? Here are some of the top factors being debated by analysts:

Increased Competition

Virtually every major automaker is now investing billions into EV development and production. Upstart competitors like Rivian and Lucid Motors also threaten Tesla’s market lead. This rising competition will make it harder for Tesla to continue dominating EV sales as new models arrive.

However, Tesla stock still maintains key advantages in proprietary technology, manufacturing efficiency, charging infrastructure, and brand appeal.

Supply Chain Disruptions

Like all automakers, Tesla has been severely impacted by chip shortages, parts scarcity, and supply chain chaos. These issues have constrained vehicle production. Tesla even raised vehicle prices substantially due to inflationary pressures.

It’s unclear when supply chains will stabilize, so production woes could persist.

Twitter Buyout Saga

Elon Musk’s $44 billion bid to take Twitter private has been a distraction for Tesla. He sold nearly $20 billion worth of Tesla shares to finance the deal, putting heavy selling pressure on the stock. Now his buyout effort is embroiled in litigation after he tried to back out.

The time and resources dedicated to the Twitter deal have taken Musk’s focus away from Tesla’s operations and concerned investors.

Production Cost Concerns

With its new factories in Austin and Berlin, Tesla is rapidly expanding production capacity. But ramping up production so quickly likely comes at the cost of efficiency, especially with supply chain turmoil. Higher costs per vehicle would threaten Tesla’s profit margins.

It remains to be seen how quickly these new factories can reach optimal utilization levels and cost performance.

FSD Controversy

Despite promises of fully autonomous driving by the end of 2022, Tesla has not yet proven Level 5 full self-driving capability. Yet Musk continues to sell the FSD software add-on for $15,000 upfront. The delayed rollout and exaggerated claims have sparked backlash.

Tesla is under growing pressure to clearly demonstrate FSD functionality or scale back the controversial monetization of a feature still in beta testing.

Can Tesla Stock Recover?

Given the steep valuation decline, is Tesla stock poised for a comeback? There are reasons for optimism:

  • Tesla stock still leads the EV race by a wide margin
  • Strong demand persists for Tesla vehicles
  • Additional factories will boost production capacity
  • High gas prices make EVs more appealing

Tesla also has potential in energy storage, solar power, autonomous driving software, and even robots like Optimus. The company’s future certainly remains bright if execution continues. But Tesla stock faces increasing competition and will need to manage costs.

For Tesla stock to return toward its highs, clear advancements in profitable growth and core business execution will be required in coming years.

The Future of Tesla Stock and the EV Industry

As a pioneer and the most valuable EV maker, Tesla and Elon Musk have an outsized influence on the electric vehicle industry. Here are some predictions for what’s next:

  • EVs will surpass gas-powered vehicles in sales by the mid-2020s or earlier
  • Self-driving capability will keep progressing, but widespread autonomy is still years away
  • Battery costs will fall, allowing more affordable EVs with longer range
  • Charging networks will rapidly expand to meet demand
  • EV variety will flourish as more models enter the market

In short, the electric and self-driving future envisioned by Tesla is coming – but not without challenges. As established automakers adapt and newcomers emerge, Tesla will need to keep innovating to retain its edge.

Musk has proven doubters wrong before, so Tesla cannot be underestimated even after its sizable stock decline. But the window of Tesla’s market dominance is closing as crossover EV adoption accelerates worldwide.

Conclusion

The rise and fall of Tesla stock has been nothing short of remarkable. Elon Musk’s vision for electric vehicles transformed Tesla from a fledgling startup into the most valuable automaker on Earth seemingly overnight. Tesla’s valuation soared on boundless optimism before plummeting back to earth as challenges surfaced.

Looking ahead, Tesla stock faces no shortage of risks – from competition to cost control to macroeconomic trends. But with Musk at the helm and industry-leading technology in tow, Tesla remains the company to watch in sustainable transport. The coming decade will define whether Tesla  can sustain innovation and performance or cede ground to hungry rivals. No matter what happens, Tesla has irreversibly changed the course of the auto industry.

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