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Tesla shares collapse after Volvo announcement

Tesla shares lost on Wednesday 7,24% of their value,after Swedish producer Volvo announced that starting with 2019 it will release only hybrid or electric cars, raising concern among investors due to increased competition.

Tesla shares dropped by $25,5 per unit, reaching $327, yet the electric car producer run by entrepreneur Elon Musk still has a capitalization of $52 bln. The company previously had a capitalization of $55,9 bln, so the loss on the stockmarket is of $3,9 bln at once.

Volvo will not totally give up classic fuel engines, but the company’s announcement raises concerns for Tesla. This is because Tesla owns at the moment only 3% of the total sales of electric or hybrid vehicles, with the world’s largest market of this kind being China, a country from where the Geely group, the one that owns Volvo, comes from.


Tesla is also negotiating building a car factory in China and has Chinese technology group Tencent, known as the “Facebook of China”.

On the other hand, almost all auto producers now offer hybrid or electric cars, from Toyota, which popularized the type through the Prius model, to BMW i3 and i8, Nissan Leaf and Renault Zoe.

The investors’ concerns come from the fact that more and more producers start offering electric or hybrid models, which will automatically make batteries become cheaper. This will further lead to the loss of Tesla’s main advantage at the moment, the Gigafactory in Nevada.

Daniel Higgson