Is Tesla the biggest loser among the ‘Magnificent Seven’ this year?

AUSTIN, TEXAS: Telsa’s stock is down 17% this year and slumped 33% from its all-time high in December last year, making it the biggest loser among the US tech giants, or so-called Magnificent Seven stocks.

The company’s stock price has taken a hit, erasing most of its gains from last year’s “Trump Trade”, as concerns mount over the company’s competitive edge in the autonomous vehicle market. The Chinese electric car brand BYD has partnered with DeepSeek to develop its autonomous technology, sending shockwaves through the industry and causing Tesla’s stock to drop 17 percent this year.

The partnership between BYD and DeepSeek, a Chinese startup, has raised concerns among investors and analysts about Tesla’s ability to compete in the full self-driving (FSD) market. DeepSeek’s R1 model has been shown to be highly effective, even surpassing some of its US counterparts, including DeepAI’s ChatGPT. What’s more, DeepSeek developed its AI model at a fraction of the cost of its US competitors, sparking concerns about Tesla’s ability to keep up.

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Meanwhile, Elon Musk’s leadership in acquiring OpenAI for $97.4 billion has raised concerns about his ability to focus on Tesla’s core business. Additionally, the fading optimism around Trump’s support for Tesla’s self-driving ambitions has contributed to the decline in the company’s stock price.

Tesla’s autonomous vehicle strategy is central to its growth plans, and the company is awaiting approval for public road use in China. However, BYD’s adoption of DeepSeek’s AI model, known as DiPilot, has the potential to rival Tesla’s FSD technology at a lower cost. With Tesla missing market expectations in deliveries and earnings in the fourth quarter of 2024, the company needs to accelerate its autonomous driving project to stay ahead of the competition.

The news has not only unsettled Tesla’s shareholders but also those of other Chinese car makers such as Xpeng and Nio, causing a sharp selloff in their stocks. The Chinese tech sector has seen its shares soar since the launch of an inexpensive AI model by a Chinese startup, making it a growing threat to US tech companies.