(Reuters) – Tesla stock experienced a sharp decline of approximately 5% on Monday in response to news from major supplier Panasonic Holdings. The company announced that it had reduced automotive battery production in the September quarter, fueling concerns of a global slowdown in electric-vehicle (EV) sales.
Panasonic cited a decrease in demand for high-end EVs in North America, which aligns with Tesla CEO Elon Musk’s recent comments about the impact of higher borrowing costs on vehicle demand.
“Panasonic’s warning regarding soft demand for Tesla’s Model S and Model X cars has raised concerns about the global economic outlook,” said Edward Moya, senior market analyst at Oanda.
Earlier in the day, General Motors reached a tentative deal with the United Auto Workers union, joining Ford Motor and Chrysler-owner Stellantis in resolving labor disputes. This development potentially eliminates disruptions that could have benefited Tesla.
Throughout the UAW strike, Tesla shares have experienced a greater decline of 34% compared to the 30% to 33% declines seen in Ford Motor and General Motors shares, and the 33% rise in Stellantis’s shares.
Tesla investor Gary Black attributed the weakness in Tesla shares to chipmaker Onsemi’s gloomy forecast.
“ON provides chips to automotive players that capture over 50% of global EV sales, including four of the top five China EV manufacturers,” he stated in a post on social media platform X.
Onsemi CEO Hassane El-Khoury acknowledged that the company’s main European clients were working to address their inventory and expressed concern about “increasing risk to automotive demand due to high interest rates.”
The decline in demand will further impact Tesla’s gross margin, which contracted to 17.9% from 25.1% between July and September compared to the previous year. The EV maker’s aggressive price cuts, which sparked a price war in crucial markets like China, were responsible for this decline.
According to LSEG data, Tesla is currently valued at approximately 56 times its 12-month forward earnings estimates, while Ford and General Motors have valuations of 5.6 times and 4.1 times, respectively.
Reporting by Chavi Mehta in Bengaluru; Additional reporting by Akash Sriram in Bengaluru; Editing by Shinjini Ganguli
