Shares of electric vehicle giant Tesla, Inc. TSLA fell over 3% in premarket trading on Friday, as rumors of production cuts in China reignited concerns about potentially underwhelming deliveries.
China Production Cutbacks? Earlier this month, Tesla reportedly instructed employees at its Giga Shanghai facility to reduce production of Model Y and Model 3 EVs, the company’s two vehicles produced at the plant, according to Bloomberg’s sources. The company allegedly requested a shift from the typical 6.5-day workweek to a five-day schedule.
This news comes at a delicate time, as Tesla prepares to announce its first-quarter sales in less than two weeks. Investors may connect the rumored production cut to slowing demand for Tesla vehicles in China, a key market where the company faces competition from agile domestic EV startups.
See Also: Everything You Need To Know About Tesla Stock
China’s Impact and Delivery Worries: Data from China shows that Tesla’s insurance registrations dropped 6.8% week-over-week to 12,300 units in the week ending March 17th. Furthermore, data from the China Passenger Car Association reveals that Tesla’s wholesale sales in China (including domestic sales and exports) for the first two months of 2024 reached 131,812 units, marking an 8% year-over-year decline.
China is a crucial market for Tesla, boasting higher margins for vehicles manufactured there compared to other factories. Analysts and Tesla observers fear that the company might barely surpass its first-quarter delivery figure of 422,875 units from last year.
Pre-Market Slump: In premarket trading, Tesla’s stock dropped 3.48% to $166.80, according to Benzinga Pro data.
© 2024 Benzinga.com. Benzinga does not provide investment advice. All rights reserved.
Comments
Trade confidently with insights and alerts from analyst ratings, free reports and breaking news that affects the stocks you care about.
