Shulou(Shulou.com)11/24 Report--

On October 31, Tesla shares fell nearly 5 per cent on Monday, US time. Earlier, Tesla's long-time partner and battery supplier Panasonic admitted that Panasonic's battery production in Japan fell in the third quarter to the end of September 2023.

The news raised concerns among investors about weak demand for electric vehicles, especially those that are expensive and may not be able to enjoy US government tax breaks or other incentives. Panasonic's batteries are used in Tesla's earlier and more expensive Model X SUV and Model S sedans.

During Tesla's third-quarter earnings call on October 18, CEO Elon Musk reminded shareholders that high interest rates put tremendous pressure on the company to keep prices low and could hamper consumers' ability to buy or rent electric cars.

Musk also said many times that Tesla faces more severe challenges as the much-anticipated electric pickup truck CyberTruck goes into production. Not long ago, he lamented: "CyberTruck is our own grave."

"I just want to lower people's expectations of CyberTruck. It's a great product, but from a financial point of view, it will take another 12 to 18 months to become a significant cash flow contributor," Musk said on the conference call.

Tesla's share price has fallen more than 18 per cent since that conference call. Tesla made a short profit of $3 billion from that day to Friday's close, according to Ortex, a London-based financial information service. As of October 27, Tesla's shorts were worth about $18.08 billion, accounting for 3.21% of free-floating shares.

Toni Sacconaghi, an analyst at Bernstein, a US investment bank, wrote in a research note to clients on Monday that the company expected Tesla's "profit margins to decline and sales disappointing" in fiscal year 2024. Bernstein expects Tesla to target a share price of $150 over the next 12 months.

Although Wall Street expects Tesla's car delivery next year to reach 2.3 million, an increase of about 500000 over the same period last year, Sacconaghi wrote: "in order to increase the delivery of 500000 vehicles, Tesla had to cut prices by about 16%. This will reduce overall operating profit margins by 750bp. It is not clear whether Tesla will cut prices further to boost sufficient demand growth without causing negative free cash flow. We believe that Tesla's delivery volume next year may be lower than market expectations and face lower profit margins. "

Bernstein is pessimistic about Tesla and expects Tesla to deliver 2.15 million vehicles next year, with diluted earnings of $2.59 per share, compared with market consensus of 2.3 million vehicles, or $3.30 per share.

This pessimism is spreading in all areas of the electric car market. Shares of ON Semiconductor, which supplies chips to electric vehicles, tumbled 20 per cent on Monday after the company's fourth-quarter guidance was disappointing.

As of Monday, Tesla's shares had fallen nearly 5 per cent to $197from Friday's closing price of $207m. In less than five hours of trading, the value of Musk's 715m shares and vested options lost $7 billion.

After the market closed on October 17, Mr Musk reported disappointing third-quarter results and poor fourth-quarter guidance, exacerbating the fall in Tesla's share price. Since then, Tesla's share price has fallen 23%, the market capitalization has lost $189 billion, and Musk's personal wealth has shrunk by $41 billion.

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