Tesla (NYSE: TSLA) has termed reports about it considering cutting production in China as incorrect. The stock is nonetheless trading lower today.
Bloomberg first reported that Tesla is considering cutting production in China. Notably, last month, the company delivered a record number of cars in China. In terms of deliveries, November was a good month for Chinese EV makers like NIO and Li Auto also and both of them reported record deliveries.
Xpeng Motors meanwhile reported a steep fall in its November deliveries. The stock has risen sharply over the last week despite reporting weak earnings and deliveries. It was higher in premarkets today also but is trading lower in regular trading.
Coming back to Tesla, the China Gigafactory is its most productive plant. It not only delivers cars to China but also exports cars to other countries. While Tesla has denied reports of production cut in China, markets are concerned about the demand for Tesla cars.
Tesla has lowered car prices in China and offered additional insurance incentives in November. Notably, during the Q3 2022 earnings call, Tesla CEO Elon Musk said that China is in a kind of recession driven by the slowdown in the property market.
He however categorically denied that Tesla is witnessing any slowdown in demand and emphasized that the fourth quarter would be “epic.”
He also refuted that Tesla would lower production. Musk said, “we’re very pedal to the metal come rain or shine. So, we are not reducing our production in any meaningful way, recession or not recession.”
Tesla Denies Reports of Production Cut in China
Notably, during the third quarter earnings call, Tesla said that the delivery growth this year would be below 50%. Musk however maintained the long-term delivery forecast of 50% CAGR growth adding that there could be years when the growth would be below 50%.
Meanwhile, Tesla is also offering a credit of $3,750 to US buyers who take car deliveries in December. While Tesla might have called reports that it is cutting production in China “untrue,” connecting the dots shows that the company is facing some pressure as it strives to scale up year-end deliveries.
Musk completed the Twitter acquisition in October. Tesla stock, which was anyways under pressure this year amid the rout in tech stocks extended its decline following Musk’s Twitter acquisition.
Several Wall Street analysts, including some of the long-time Tesla bulls, are also getting apprehensive about the stock after Musk’s Twitter acquisition. Dan Ives of Wedbush Securities, who is among the perma Tesla bull camp, removed TSLA stock from his “Best Ideas List” and lowered the target price from $300 to $250.
Tesla Stock Has Fallen Since Musk Acquired Twitter
Morgan Stanley, which is among the most notable TSLA stock bull also believes that Musk’s ownership of Twitter could affect how some consumers perceive Tesla. However, the brokerage advised buying the dip in TSLA stock and is “constructive” on long-term EV adoption. We have a guide on how to buy Tesla stock.
Musk has previously said that TSLA could sell as many as 20 million EVs by 2030. That goal might look lofty though as legacy automakers ramp up their EV production. General Motors, for instance, predicted that its sales would rise 12% annually until 2025 led by higher EV sales. In 2025, it expects EV sales of $50 billion and total revenues of $225 billion. The company has said that it would sell only zero-emission cars by 2035.
Legacy Automakers are Ramping Up EV Production
Ford has set ambitious plans for its EV business. It expects its annual EV production run rate to reach 600,000 by the end of 2023 and 2 million by 2026. Morgan Stanley finds Ford stock as a buy amid its EV pivot.
Musk has restored Donald Trump’s Twitter account which has irked many. Trump meanwhile is not keen on joining Twitter. He has launched his own social media business which has announced a merger with Digital World Acquisition (NYSE: DWAC). We have a guide on how investors can buy DWAC stock.
At a time when Musk should have been razor focused on Tesla amid rising competition from other pure-play EV companies and legacy automakers, he is entangled with fixing the troubles at Twitter. With competition heating up in the EV industry, the last thing TSLA investors would have wanted is Musk devoting time to Twitter rather than Tesla.
Related stock news and analysis
- Best Twitter Crypto – Cryptocurrency Trending on Twitter
- How to Invest in Carbon Credits in 2022
- Tesla Stock in Penalty Box amid Musk’s Twitter Antics, Market Share Loss
Dash 2 Trade - New Gate.io Listing
- Also Listed on Bitmart, Changelly, LBank, Uniswap
- Collaborative Trading Platform Token
- Featured in Bitcoinist, Cointelegraph
- Solid Proof Audited, CoinSniper KYC Verified
- Trading Community of 70,000+ Members