In a world of growing energy shortages, Musk will have to make important choices.
Elon Musk, the head of Tesla, the company that makes electric cars, saw his company’s stock price plummet by 10% on September 3. Investors were reacting to the fact that Tesla’s Q3 financial statements were disappointing. The company produced 365,000 cars and sold 343,000, significantly less than what analysts had expected for sales: 364,66 thousand cars.
Tesla factories in Germany and U.S. Texas are facing not so bright prospects. Energy products in Germany are up 36% year-over-year. In the U.S., the period of declining gasoline prices has begun to end, even though demand for the commodity is stagnant due to the decline in American consumer activity. Energy prices have gone up again, and it is symbolic that for the first time in U.S. history the price of a ton of coal has exceeded $200 per ton.
All this inevitably makes the production of Tesla electric cars risky in terms of profitability. The car components come from different countries, and difficulties with global logistics due to the COVID-19 pandemic still persist. The cost of producing Tesla electric cars is rising, including the rising cost of electric batteries as well as the infrastructure to recharge such cars. At the same time, demand for durable goods in the U.S. and Europe is falling, which will have a depressing effect on Tesla sales.
In such a situation, the prospect of Tesla investing in bitcoins begins to look very different. Recall that at the end of the second quarter, cash proceeds from the sale of bitcoins from the balance sheet of Tesla exceeded organization’s net cash flow. The company had about $218 million in bitcoins by the start of Q3. Given that investors showed interest in the company’s stock at the end of Q2 and this was on the back of successful bitcoin investments, Tesla can continue follow its commitment to long-term investments in digital assets to eventually make investors happy, as it did at the end of Q2 and as it failed to do at the end of Q3, which led to a collapse in the company’s share price.