Shares in electric vehicle maker Tesla (TSLA:NASDAQ) recently slipped to their lowest levels in nearly three years after founder Elon Musk sold a big slug of shares in the company to help fund his takeover of social media platform Twitter.

Musk’s struggles with Twitter are inevitably grabbing lots of headlines and will only add to investor concern that his focus is being diverted from the day job at Tesla, but there are other reasons why the latter’s share price is struggling.

Sentiment towards Tesla, which is recalling more than 40,000 of vehicles in the US because of a potential power-steering problem, has also been affected by analysts downgrading earnings forecasts, a third quarter revenue miss on 19 October and price cuts in China linked to rising competition.

As Berenberg observed in the wake of the third quarter numbers: ‘Although Tesla has so far shown its ability and willingness to pass on costs through pricing, it may become less aggressive in the face of competitor model launches.’

While the shares rallied sharply after a lower-than-forecast US inflation reading on 10 November, they are still down 51% year-to-date and the company undoubtedly faces increasing competitive pressures from traditional automotive firms and electric vehicle specialists alike.

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