Tesla stock feels like it’s getting pounded from all sides. The possibility of production problems in Shanghai may have contributed to another drop in share price on Thursday morning.
Bloomberg reported on Thursday that electric vehicle manufacturer Tesla (NASDAQ:TSLA) was reducing shift lengths at its manufacturing in Shanghai from eleven and a half hours to nine and a half hours.
A request for Tesla to comment on the report still needs to be met with a response from the company.
Tesla Stock Performance
In premarket trading, Tesla stock had a decrease of 1.9%. Futures contracts for the S&P 500 index (SPX +0.75%) and the Dow Jones industrial average (DJIA +0.55%) are trading higher by 0.2% and 0.1%, respectively. Before trade on Thursday, the stock price had decreased for the previous three days in a row, resulting in a loss of approximately 11% over that span of time.
If the shift shortening is confirmed, this would indicate that output is decreasing. The information shared on Thursday followed allegations that surfaced earlier in the week stating that Tesla was planning to reduce the production of the Model Y by 20% in Shanghai for December. Tesla has refuted those rumors, although the specifics of its production timeline remain unknown.
A decrease in production may indicate an increase in the scarcity of parts due to China’s zero-Covid policy. It may indicate that there is an issue with the demand. It may be just a result of the usual monthly ups and downs, but it could also be related to manufacturing at Tesla’s new plant in Berlin. (The output of Shanghai is sold in China and Europe.)
Investors don’t know, and they despise being in uncertain positions.
In recent times, investors have had to worry about more than just the unpredictability of production. In addition, Tesla is providing customers in China and the United States with incentives to take possession of their vehicles before the end of the year. There may be a decline in demand, which the use of incentives may show. There is also the possibility that these are actions taken to smooth out demand.
New federal purchase incentives are being made available to consumers in the United States beginning in January. This has the potential to push demand into 2023. Because specific purchasing incentives in China will expire in 2022, it will be more challenging to justify the transaction in that country. This may be part of a rush toward the quarter’s conclusion to meet delivery goals.
It is anticipated that Tesla will deliver more than 440,000 vehicles in the fourth quarter, which would set a new record. This would bring total deliveries to just under 1.4 million units for the year, an increase of almost 45% compared to 2021. The expansion is anticipated to continue from there by investors. In 2023, it is anticipated that Tesla will have delivered two million units. The achievement of those goals will significantly impact how the stock performs over the following year.
The market value of Tesla was reduced by more than $500 billion due to the stock’s decline of around 51% before trade on Thursday.
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