Tesla’s not-good-but-very-bad year got even worse on Friday following news that Elon Musk’s powerhouse was cutting production at its Chinese plant.
Tesla reduced production at its Shanghai plant (which produces for both domestic and international markets) starting earlier this month and asked employees to work fewer days, Bloomberg reported, citing people familiar with the question.
The company’s shares have already fallen more than 31% since the beginning of the year and fell as much as 4% in intraday trading based on Chinese reporting, before rebounding slightly. Shares were down just under 2% Friday afternoon. Year to date, the S&P 500 is up about 10%.
Several setbacks in recent months have dented the company’s market capitalization by nearly $250 billion.
Late last year, BYD, backed by Warren Buffett, toppled Tesla as the world’s top electric car maker by sales. The Chinese electric vehicle company delivered 526,409 vehicles in the fourth quarter, about 8% more than the 484,507 delivered by Tesla.
Chinese automakers are increasingly making their mark on the electric vehicle market, and the auto market in general, with low-cost vehicles that have left even traditional automakers like Honda and Nissan struggling. Musk himself has praised Chinese automakers, saying they are “the most competitive automakers in the world.”
Also to compete with Chinese automakers, Tesla has cut prices several times over the past year. Partly due to Tesla’s price cuts, Hertz CEO Stephen Scherr told Bloomberg in January that the company expected to sell 20,000 electric vehicles, most of which belong to Tesla.
Tesla’s fourth-quarter earnings saw its revenue fall short of analysts’ expectations and its operating income fall 47% from a year earlier. The company also warned investors that “volume growth will be lower” next year as it focuses on a “next generation” vehicle that will target budget-strapped consumers.
Amid the lackluster results, some experts have suggested it may be time for Tesla’s board to force Musk out of the C-suite. Musk, although a visionary entrepreneur, has been critical of Tesla by some for his outspoken behavior and reportedly demanding nature of workers.
In January, Musk asked for 25% electoral control of Tesla before continuing with the development of robotics and artificial intelligence. The ultimatum was important given that Tesla’s monstrous valuation is at least partly based on hopes that Musk can eventually move the company beyond cars into a tech giant.
That promise hasn’t materialized yet, and Tesla still has one of the highest price-to-earnings multiples of Magnificent Seven stock. The pressure on the company is mounting: Last week a top analyst bluntly described Tesla as a “growth company without growth.”
Tesla did not respond to a request for comment.