Tomorrow, the first of Tesla’s game-changing mass-market electric cars is scheduled to roll off the production line. Next year, Elon Musk hopes to produce 500,000 Model 3 vehicles, which start at $35,000.
The run-up to the realization of Musk’s audacious automotive ambitions should be cause for celebration at Tesla. Instead, the company has had a torrid time in the markets, shedding more than $10 billion in market value over the past two weeks. Tesla’s shares hit an all-time high on June 23, valuing the company at $63 billion.
Tesla opened down around 3% in trading today, following a 7% drop yesterday. Volvo’s eye-opening announcement yesterday that it will only produce cars with electric or hybrid engines from 2019 made it clear that Tesla will have plenty of competition from traditional carmakers in the near future.
Although it’s Musk that made electric cars sexy (paywall), if—or when—the likes of Toyota, Volkswagen, GM, Daimler, Volvo, and others ramp up their electric-vehicle production, the premium valuation that investors have awarded to Tesla may not look as attractive as before.