Once the renegade darling of Wall Street, the outgoing year imposed severe challenges for electric vehicle stalwart Tesla (NASDAQ:TSLA). As a recent CNBC article noted, Tesla runs on pace to hit its worst month, quarter and year on record. Still, CEO Elon Musk put an encouraging tone on a year-end company-wide email, stating in part not to worry about the wildness of stock market. On Thursday afternoon, TSLA stock gained about 6%.
In the aforementioned email sent Wednesday, Musk thanked Tesla employees for their “hard work” and “exceptional execution” this year. In the body of the email, the chief executive mentioned that several of the company’s electric vehicles arrived “at the last minute,” thus stressing the importance of a final blitz of effort. He also asked for volunteers to help deliver EVs to customers before Dec. 31.
However, it’s the postscript that had the market buzzing about TSLA stock. “Btw, don’t be too bothered by stock market craziness. As we demonstrate continued excellent performance, the market will recognize that. Long-term, I believe very much that Tesla will be the most valuable company on Earth!”
Nevertheless, even inclusive of Thursday’s jump higher, TSLA stock fell roughly 34% in the trailing month. For the year, shares tanked about 70%. While Musk blames rising interest rates for Tesla’s underperformance, critics point to the Twitter buyout as a bigger culprit.
Per a separate CNBC report, Musk sold tens of billions of dollars’ worth of TSLA stock to finance the $44 billion buyout of the social media company.
TSLA Stock Faces a Range of Macroeconomic Headwinds
To be fair to Musk, rising rates and the context behind the ascendance certainly contributed to volatility for TSLA stock. Indeed, the primary reason for the Federal Reserve effectively raising borrowing costs centered on skyrocketing inflation. And inflation represents one of the key macroeconomic headwinds affecting the EV industry.
Early this year, Kelley Blue Book reported that the average price of a new EV stood at $62,876. More recent data indicated that this price tag jumped to over $66,000. This figure has become uncomfortably close to the latest read of U.S. median household income of $70,784.
In other words, most American families cannot comfortably afford a new EV. And with Tesla occupying a higher price range compared to other automotive companies, TSLA stock invariably faces pressure.
Of course, EV industry advocates point toward economies of scale and reduction of battery costs as long-term positive catalysts. Unfortunately, monetary policy ambiguities and their impact on the workforce took some sheen from this narrative. As well, geopolitical flashpoints don’t help matters.
Specifically, EV makers utilize nickel thanks to its higher energy density and greater storage capacity. However, Russia represents the third-biggest nickel producer in the world. And all suppliers will presumably rise in relevance should EV integration initiatives expand, thereby lifting demand (price).
Notably, Yale School of the Environment warned earlier this year that the European Union relies heavily on Russian-supplied nickel.
A dark cloud hangs over the EV industry. Thus, investors must exercise caution with TSLA stock despite today’s positive performance.
On the date of publication, Josh Enomoto did not have (either directly or indirectly) any positions in the securities mentioned in this article. The opinions expressed in this article are those of the writer, subject to the InvestorPlace.com Publishing Guidelines.
