- Shares of Tesla the pioneer of electric vehicles fell spectacularly in 2022. This trend was the same for auto shares which list substantial amounts of value during the year.
- Tesla despite its anemic showing in terms of share price performance managed to deliver a record number of EVs.
- The EV company increased production of its products by as much as 40%.
- This impressive development by Tesla failed to excite the market which hammered the share price resulting in the EV company shedding 64% of its value in 2022.
- Notwithstanding the skepticism from the market Tesla has been making positive strides with its Gigafactory initiatives.
- Africa has been the focus of the Gigafactory initiatives by Tesla. A Gigafactory is a massive manufacturing facility that aims to speed up and scale up the manufacture of electric vehicles.
- The Gigafactory concept will contribute substantially to the economic wellbeing of African countries where Tesla has either set up operations or has partnerships.
- The investments in Africa by Tesla through its Gigafactories are set to benefit Europe which is in need of new and better ways to conserve energy.
- Astute investors made money from the decline in value of Tesla shares through a strategy called short selling. Where an investor borrows shares in a company he or she does not own from a broker and then the investor sells them immediately in the hope that the price will decline at which point they purchase them and return them to the broker pocketing the difference.
The year’s performance of the stock price was not very impressive. Yet, this is hardly shocking, considering that global financial markets as a whole experienced a decline in value in 2022. In 2022, Tesla was a pioneer in the electric vehicle (EV) sector, but it was unable to capitalise on this position by offering anything significantly different from its competitors. Automotive companies as a whole concluded 2022 in the red for their respective stockholders. Ford, GM, and Toyota all finished 2022 with severely negative share price performance. Take note of the graphic below:
If an investor had purchased US$1 worth of Toyota Motor Corporation stock at the beginning of the year and held onto it throughout the year, they would have ended 2022 with 33 cents less than they had at the start of the year. From the start of 2022 through the end of 2022, investors in General Motors lost 38 cents on every US$ 1 they put into the company. If you had invested in Ford Motor Company, you would have lost a whopping 46 cents out of every US dollar you put in. Tesla’s losses added up to 64 cents for every dollar of investment. As a result of its stock’s dismal performance, Tesla is now widely recognised as one of the worst-performing stocks in the United States.
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An understanding of the factors that have contributed to the EV manufacturer’s poor stock performance is important for investors. There is no correlation between the company’s operational and financial performance and the bad performance of its stock price. Despite the fact that the company’s Q4 2022 operating performance and the year overall failed to impress investors. According to a CNBC article, it fell short of investors’ expectations. CNBC’s claim isn’t entirely accurate because, despite missing estimates, the company still had its best quarter ever for deliveries in the final month of 2022. When compared to 2021, the number of vehicles delivered by the company increased by 40% in 2022.
Tesla in Africa
Through its Gigafactory initiatives, Tesla is boosting EV production. A Gigafactory is a massive manufacturing facility that aims to speed up and scale up the manufacture of electric vehicles. Currently, Tesla has Gigafactories in both Nevada and Shanghai, and the company is considering expanding to Africa in order to better service its export markets in Europe and elsewhere.
Tesla is currently expanding its operations into the Western Cape region of South Africa. The site will eventually become a factory producing batteries and drivetrains for electric vehicles. Tesla is making this investment as part of its strategy to increase its presence in global markets and lower prices by establishing manufacturing hubs closer to the company’s target consumers. The area also has an abundance of materials like lithium and cobalt, which are used extensively in battery technology research and development for electric vehicles.
Tesla is currently developing new technologies to enhance the efficacy and efficiency of EV manufacturing. For instance, the firm is funding research into battery production technology in order to create cheaper and more efficient battery packs with increased range. And this is where Tanzania might enter the picture. Despite the fact that there is no branch of the company in Tanzania, activities are being conducted from the company’s headquarters in the country. To make electric vehicles, nickel is essential.
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Kabanga Nickel Ltd. of Tanzania is presently trying to raise $1.3 billion to set up a significant mining operation in Tanzania. Tesla has shown an interest in following BHP’s recent $50 million investment in Tanzania’s mining sector. Kabanga Nickel Ltd.’s board of directors is continuously pursuing investment opportunities.
There are a lot of reasons why Tesla’s investments in Morocco are crucial to Europe’s economic development. First, Morocco’s involvement in EV chip research would help ease the worldwide shortage of automotive microchips, making it easier for EV vehicle makers to keep up current production rates. Since Tesla has only recently begun selling its products on the African continent, the installation of its first two Supercharger stations in Morocco is of the utmost importance. Given its convenient location—near Europe and highly developed at the same time—it is no surprise that Morocco is often recommended as a low-cost vacation spot. This makes it an ideal spot for Tesla to set up shop and grow their brand. The increasing need for electric vehicles (EVs) in Europe also poses a threat to the supply chain, making early planning and investment all the more important. By establishing a production network in Morocco, Tesla will be able to meet the rising demand for electric automobiles in Europe. We can reach both of these objectives at the same time.
What’s in Store for Tesla in 2023
The market and Tesla stockholders have not forgiven the company’s largest shareholder for the US$44 billion+ it reportedly cost to complete the acquisition of Twitter in October 2022. Twitter’s acquisition price was funded in significant part by proceeds from the sale of Tesla stock. Selling off company shares by top executives to fund personal pet projects is never good for stock prices. Despite the fact that Tesla’s share price did poorly in 2022, some astute investors profited from the EV manufacturer’s dismal showing on the stock market. Investors that took short positions in Tesla shares in 2022 saw huge gains. According to Institutional Investor magazine, 2022 was the first year in which short sellers made money on their transactions since 2018. The article states, “In 2022, short sellers of U.S. equities and American depositary receipts earned $300 million, a gain of 30.83 percent.”
Read: Tesla shares rebound after better than feared results.
Why Tesla, Why Africa and Why investors should care
The EV business is one in which Africa could emerge as a global leader.
As a first benefit, Tesla’s investment in Africa would lead to the addition of new employment opportunities. Engineers, technicians, and assembly line employees are all needed to bring electric vehicles into the world. Numerous Africans’ standard of life and employment prospects would be enhanced by this. More jobs would be created in EV production, sales, and maintenance as demand for these vehicles rises. Second, if Africa was instrumental for Tesla to make EVs, that would give the continent a new source of revenue. Currently, the export of raw materials like minerals and oil is crucial to the economies of many African countries. However, market forces and price swings make these assets risky to rely on. Africa’s export economy may be more stable if it relied less on the export of raw materials and more on the export of finished commodities like electric vehicles. Tesla’s production of EVs would also assist to open up new export markets for Africa as more nations adopt environmentally friendly transportation legislation. Finally, Tesla would aid Africa in its efforts to combat climate change by lowering the continent’s overall carbon impact. Producing clean and efficient automobiles, Africa might play a major part in this transition towards more sustainable transportation as the world transitions towards more green modes of mobility. Not only would this assist the environment, but it would also boost Africa’s reputation as a good global citizen, perhaps even Elon Musk’s position as a global citizen, something which may lead many to relook at their investment in Tesla.
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