Elon Musk's Tesla experienced a significant drop in its stock value after Deutsche Bank expressed apprehensions about the electric automaker's prioritization of autonomous vehicle technologies amid financial strain. The brokerage's decision to downgrade Tesla's stock to "Hold" and reduce its price target raised flags about the company's strategic shift away from a lower-priced vehicle in favor of pursuing Robotaxis.
Deutsche Bank highlighted the complexities involved in achieving full driverless autonomy as a notable obstacle for Tesla, pointing out the technological, regulatory, and operational challenges such a feat entails. The cancellation of the Model 2 project raised concerns about the lack of new consumer vehicles in Tesla's pipeline, potentially impacting both its sales volume and pricing for the foreseeable future.
As Tesla grapples with declining profitability due to price reductions aimed at stimulating demand for its electric vehicles, the company recently implemented workforce layoffs as part of its strategy. Amid these financial struggles, Tesla's attempts to revive Elon Musk's massive pay package from 2018 faced setbacks after a Delaware judge's rejection earlier in the year. Despite these challenges, Tesla remains the most valuable automaker globally, although its market capitalization has seen a decline, hinting at investor concerns over the company's financial performance.