Tesla has always been a volatile stock, with remarkable surges in value frequently followed by sudden, painful reversals – triggered by unfavorable news or bad financial results. The swing that&#8217;s played out in the past eight trading days has been a doozy, with the shares dropping 19% from their June 23 high.
The current slump has eliminated more than $12 billion of market capitalization and in the process taken away Tesla&#8217;s bragging rights as the <a href="https://www.forbes.com/sites/alanohnsman/2017/04/10/musks-tesla-rockets-past-gm-to-become-the-most-valuable-us-carmaker-at-51-5-billion/#198cb9b929e6" target="_blank" rel="noopener noreferrer">most valuable U.S. carmaker</a>.
Shares of the Palo Alto, California-based company dropped 5.6% on Thursday, shrinking Tesla’s market capitalization to $50.7 billion, down from <a href="https://ycharts.com/companies/TSLA/market_cap" target="_blank" rel="noopener noreferrer">$62.99 billion</a> less than two weeks earlier. That put Tesla behind General Motors, which had a $52.65 billion valuation on Thursday, though still ahead of Ford at $44.64 billion.
The biggest hits to Tesla came in trading this week, with consecutive declines every day through Thursday. That coincided with Elon Musk’s announcement that the company’s long-awaited mass-market car, the $35,000 Model 3, <a href="https://www.forbes.com/sites/alanohnsman/2017/07/03/elon-musk-says-tesla-model-3-deliveries-to-start-slowly-from-july-28/#1050c5e76514" target="_blank" rel="noopener noreferrer">begins shipping late this month</a>. While it&#8217;s a positive development, Musk also said deliveries would be limited until the end of the year. (Just 30 units in July; 100 in August; maybe 1,500 in September; then rising to 20,000 by December, if all goes well.)
<a href="http://www.forbesafrica.com/billionaires/2017/06/12/elon-musks-goals-tesla-will-require-billions-capital-investors-cheer/" target="_blank" rel="noopener noreferrer">Elon Musk&#8217;s Goals For Tesla Will Require Billions More In Capital; Investors Cheer</a>
Tesla also said second-quarter sales and production of Model S sedans and Model X crossovers, both of which typically sell for $100,000 or more, fell short of the company’s and analysts&#8217; expectations. Instead of 25,000-plus, it got just over 22,000 cars to customers worldwide. The cause was a shortage of 100-kilowatt-hour battery packs, Musk said, a problem that Tesla hadn’t previously disclosed.
Aside from that, Goldman Sachs analyst David Tamberrino saw something troubling in Tesla’s July 3 sales and production release: A looming slowdown in growth for Tesla’s two highest-margin vehicles.
“We believe that the Model S and Model X are showing plateauing demand,” Tamberrino, who rates Tesla a &#8220;Sell,&#8221; wrote in a July 5 research report. That led him to cut his growth forecast for the two vehicles to a 5% compound annual growth rate through 2021, down from a previous expectation of a 13% annual growth rate.
He also cut his target price for the stock to just $180, far below Tesla’s $308.83 close on July 6.
The threat of new competition in the electric vehicle space is also building up. Volkswagen, Audi, BMW, General Motors, Nissan, Honda and other companies for the past year or so have announced plans to add new and better EVs to their portfolios. But on July 5 <a href="https://www.forbes.com/sites/danroth/2017/07/05/volvo-electrifies-or-dies/#5f2baddf60c4" target="_self">Volvo went even further</a>, saying that it would transition to an all-electric lineup starting in 2019. At that point, it will no longer sell vehicles with merely gasoline or diesel engines. Instead, it will offer hybrid, plug-in hybrid and full EV models across its product line.
“We see it – especially after a visit to China last week – as more evidence … that Tesla will face intense competition by next decade from legacy OEMs who are expanding their electric options,” Barclays analyst Brian Johnson said in a research note on July 5. He has an “Underweight/Neutral” rating on Tesla with a target price of just $165.
<a href="http://www.forbesafrica.com/billionaires/2017/06/05/elon-musk-left-worker-safety-autopilot-long/" target="_blank" rel="noopener noreferrer">Elon Musk Left Worker Safety On Autopilot Too Long</a>
In China, Tesla has yet to find a local joint-venture partner to produce its vehicles. That’s kept it a minor player so far in the biggest and fastest-growing market for electric vehicles, Johnson said. What’s more, battery prices in China may be falling to a level that puts them below what Musk is aiming for when his massive $5 billion Gigafactory moves to full production in the next year or so.
“A flood of cheap Chinese batteries will negate Tesla Gigafactory scale advantages,” Johnson said.
If all that weren’t enough, the Insurance Institute for Highway Safety said this week that Tesla’s Model S, which has earned top scores in U.S. government crash tests, <a href="https://www.forbes.com/sites/jensen/2017/07/06/try-and-try-again-tesla-model-s-still-cant-ace-tough-crash-test-automatic-braking-still-untested/#5e589ccd78e8" target="_blank" rel="noopener noreferrer">failed to attain its highest ranking</a>.
Musk&#8217;s intoxicating vision of a future marked by pollution-free electric cars and clean energy has kept Tesla shares in a unique category since its 2010 IPO.
<a href="http://www.forbesafrica.com/cover-story/2015/10/01/teslas-secret-formula/" target="_blank" rel="noopener noreferrer">Tesla&#8217;s secret formula</a>
For those who <a href="https://www.forbes.com/sites/alanohnsman/2017/06/08/elon-musks-goals-for-tesla-will-require-billions-more-in-capital-investors-cheer/#1b5aa8379d80" target="_blank" rel="noopener noreferrer">embrace Musk’s vision</a> and think that within a few years Musk&#8217;s aggressive multi-billion dollar capital expenditures will finally pay off and that Tesla will be pumping out sleek electric vehicles at an annual clip of a million or more, the stock probably looks like a bargain right now.
But view it as a conventional carmaker, and the valuation for a company with just two profitable quarters in seven years and massive capital needs for the foreseeable future looks nonsensical.
Both views ensure that volatility will remain a constant. &#8211; Written by <a class="link preload-hidden ng-binding" href="http://www.forbes.com/sites/alanohnsman/" target="_blank" rel="noopener noreferrer">Alan Ohnsman</a>, FORBES STAFF

Tesla Loses ‘Most Valuable U.S. Carmaker’ Crown As Stock Takes $12 Billion Hit

Only 21 of the Fortune 500 companies are led by women. One woman who wants to be included on that list is Rita Kavashe. She is Africa’s first female managing director (MD) of American automobile giant General Motors (GM). Kavashe leads the African operations of the number two global automobile seller as of 2012. Globally, GM sold 9.3 million units last year compared to Toyota’s 9.75 million.
The motor industry has been dominated by men; it is only now that, 105-year-old, GM has appointed 51-year-old Mary Barra as its first female senior vice president, global product development. In April, another woman, Veronica Johns, made headlines when she was appointed CEO of Fiat Chrysler Australia.
“I don’t believe there is anything like a glass ceiling. As long as there are opportunities to grow in an organization, there is no excuse regardless of whether you are a man or a woman,” says Kavashe.
Kavashe is the only female managing director in Kenya’s male-dominated motor industry. She took over the reins of GM East Africa in 2011 after an 18-year stint, which began as a sales representative. After three years she was promoted to general manager of national sales and was responsible for seven dealers in Kenya. In 2005, she was made the commercial director and five years later, she was given a short-term assignment in GM South Africa to set up their export operations.
When she returned from South Africa, she was appointed MD for GM East Africa and export director for GM Sub-Saharan Africa, where she oversees more than 40 Sub-Saharan Africa countries. In 2012, GM sold 180,000 vehicles in Africa and controlled 10% of market share.
Kenya’s motor industry is largely dominated by multinationals: Toyota, Simba Colt, Cooper Motor Corporation, DT Dobie and Indian conglomerate Tata. All of them have male directors. According to statistics from the Kenya Motor Industry (KMI), in 2012 GM lost the number one spot in terms of car sales to Japanese car maker Toyota. Kavashe is determined to regain the number one slot.
“We recently opened a new factory for buses, it can assemble three buses per day,” she says.
In Kenya, GM controls 26% of the market, while its closest rival Toyota enjoys 24.8%.
According to Business Monitor International report, domestic production is one of the ways Kenya attracts investment especially from Chinese companies. Commercial vehicle manufacturer Beiqi Foton Motor launched its first domestically-produced trucks in June 2011, after establishing a local subsidiary in the country in late 2010. As part of a growing focus on Africa by Chinese automobile companies, there are growing investments in automobile assembly plants.
While established dealers such as Toyota and imported second-hand vehicles—mainly from Japan and the United Arab Emirates, that account for around 70% of the market—give her sleepless nights; her experience of almost two decades is an advantage she has used to build local networks and contacts. Isuzu buses are one of the leading brands in Kenya because of the growing public transport and education sector, which are its largest clients.
Being at the top, especially as a woman, comes with its challenges. Grant Thornton International research shows that women hold less than a quarter of senior management positions in privately-held businesses globally. Only 24% of senior management positions are held by women. Women tend to fizzle out as they rise through the ranks because of the societal pressures that weigh heavily on them.
According to Bringing the other half to the boardroom: Case study of state corporations and listed companies in Kenya; a study by the Kenya Institute of Management, many women fear failure, which affects their confidence. There are also cultural issues that come into play. Most men are uncomfortable having a female boss and would likely do things to sabotage their leadership.
Kavashe’s management team is 80% male and although she has not encountered major challenges managing men, she says that it is important for you, as a leader, to ensure the team rallies behind you so as to achieve set organizational objectives.
As a trained teacher, with a degree in education, she applies many of the skills she acquired during her teaching career to her job in the motor industry.
“I learnt human psychology, understanding and interacting with people and planning, which I use to set and monitor my objectives.”
Her role involves making strategic decisions regarding investments, expansion and distribution in both the public and private sectors. To sit at the helm, she dedicated much time to study the competition and overcome the gender stereotypes that often discourage women from getting to the top. Women are judged harshly beginning with their looks.
She admits that sometimes she sacrificed family time and wished that she could have spent more time with her children.
“You have to manage many balls in the air because of the demands on your time. You can have your cake and eat it as long as you learn to balance,” says the mother of two.
This balancing act has forced Kavashe to make certain conscious decisions—she stopped traveling during weekends to spend time with her family.
“Before, I was busy working, then I realized that one part of my life was not moving. If there is a weekend event, I go with my children. It is very lonely at the top, you need your family to be with you!” she says.
It has not all been smooth sailing for Kavashe. One of her most challenging moments came during a review of GM’s distribution footprint; the change was not taken well by dealers. She admits that it was a frustrating moment, but after consulting with stakeholders, she went back and made slight amendments.
“As a CEO you are not always right. It was a tough moment for me because my best dealer was not happy and it created a lot of anxiety.”
For now, Kavashe is focused on motivating 350 employees at GM East Africa and ensuring that the company remains profitable. She has set her eyes on the road ahead and plans to be global CEO at the GM headquarters in Detroit. Who knows, she may just be the first African GM CEO.

Tag: General Motors

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Tesla Loses ‘Most Valuable U.S. Carmaker’ Crown As Stock Takes $12 Billion Hit

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