Wednesday, February 1, 2023
HomeMarketTesla Stock Down Again. Confusion Reigns.

Tesla Stock Down Again. Confusion Reigns.

More reports of potential production reductions at Tesla have shares reeling.

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Justin Sullivan/Getty Images

Tesla
stock feels like it’s getting hit from all sides. Shares were down again in early trading Thursday amid potential production issues in Shanghai.

On Thursday Bloomberg reported that
Tesla
(ticker: TSLA) was cutting shifts at its Shanghai plant to nine-and-a-half hours from eleven-and-a-half hours.

Tesla
didn’t respond to a request for comment about the report.

Tesla stock was down 1.9% in premarket trading.
S&P 500
and
Dow Jones Industrial Average
futures are up 0.2% and 0.1%, respectively. Coming into Thursday trading, the stock had dropped for three consecutive days, losing almost 11% over that period.

The shift shortening, if confirmed, would signal falling output. Thursday’s information follows reports from earlier in the week that Tesla was cutting Model Y production by 20% in Shanghai for December. Tesla denied those reports, but production schedule details aren’t known.

Falling production could signal more parts shortages because of China’s zero-Covid policies. It could signal a demand issue. It could be normal month-to-month fluctuations or even have something to do with production at Tesla’s new plant in Berlin. (Shanghai output is sold in China and Europe.)

Investors just don’t know and investors hate uncertainty.

Investors have had to deal with more than just production uncertainty lately. Tesla is also offering incentives in China and the U.S. for customers to take delivery by the end of the year. Incentives could be a sign of weakening demand. They could also be action taken to smooth out demand.

U.S. car buyers get new Federal purchase incentives starting in January. That can shift demand into 2023. Some purchase incentives in China end in 2022 so the deal there is harder to justify. It could be part of an end-of-quarter push to hit delivery goals.

Tesla is expected to deliver more than 440,000 vehicles in the fourth quarter, a record, bringing full-year deliveries to just under 1.4 million units—up about 45% compared with 2021. Investors expect growth to continue from there. Tesla is expected to deliver two million units in 2023. Meeting those targets will go a long way to determining how the stock does over the next 12 months.

Coming into Thursday trading, Tesla stock was off about 51%—wiping out more than $500 billion in market value.

Write to Al Root at allen.root@dowjones.com

Credit: marketwatch.com

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