Tesla’s stock declined 4.8 percent on Monday, breaking below 200 dollars and reaching lows that have not occurred since late May, even in the face of a bounce in the entire market and a resurgence in discounted tech.
Panasonic's Reduced Battery Production in Japan
Tesla’s stock was being affected by two news stories. First, Panasonic, the company that supplies its batteries to Tesla, reduced car battery manufacturing in Japan during the September quarter and lowered its projected year profit by 15 percent, citing the impact of a worldwide slowdown in sales of electric vehicles.
Across the world, Panasonic supplies battery cells for electric vehicles to manufacturers; however, in the United States, the Japanese business collaborates with Tesla to manufacture the cells at the Gigafactory in Nevada.
Panasonic's Global Production Cut and Its Impact on Tesla's Model S and Model X
Having said that, the corporation said that it has reduced production, not for North American business processes, but for clients worldwide and in Japan. In the second quarter, Panasonic ceased to provide Tesla with its 1865 electric vehicle batteries; nevertheless, the older batteries are still utilised in Tesla Model S as well as Model X cars, which are not eligible for electric vehicle (EV) tax credits under the Inflation Reduction Act (IRA).
“The IRA has a price ceiling up to $80,000 and since the high-end models exceed that level, demand decreased,” Panasonic CFO Hirokazu Umeda said on Monday.
Image Source: uk.finance.yahoo.com
The second potentially negative development for Tesla was the announcement by chipmaker ON Semiconductor that its earnings and revenue outlook were lower than anticipated as a result of declining sales.
Silicon carbide chips manufactured by ON Semiconductor, are used by Tesla in its electric vehicle powertrain and other essential parts. Compared to regular silicon chips, silicon carbide chips can often resist higher temperatures, use less energy, and are designed for a longer lifespan. The financiers may be watching a decline in the market for silicon carbide as a sign that sales of electric vehicles particularly Tesla’s, are softening.
Gary Black, a Tesla investor from The Future Fund, commented on the company’s decline today.
“$TSLA weakness today could be due to big $ON guidance miss (-18%). ON sells silicon carbide chips to EV makers and cited 'increased risk to automotive demand due to high-interest rates,'" Black wrote on X, formerly Twitter, around midday on Monday.
Although down more than 22 percent in the last month, the stocks of Tesla continue to be up 60 percent year to date.
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