Tesla shares plummet amid Covid chaos in China

Tesla shares plummet amid Covid chaos in China

While tech billionaire Elon Musk seems to have his hands full with his $67 billion acquisition of Twitter and the aftermath since, another of his ventures, arguably his bread and butter, has problems of its own.

Shares in Musk’s electric vehicle maker Tesla fell 6.8 percent Monday night, hitting their lowest level in two years.

In a guest comment published in the Australian Financial reviewChanticleer columnist James Thomson made a connection to China’s precarious reduction of its Covid-zero policy, which mandates its pandemic response restrictions, including lockdowns and travel.

China’s stock market surged in early November after authorities finally took steps to ease one of the world’s most restrictive crackdowns on Covid-19.

On Nov. 11, China officially reduced quarantine periods for travelers entering the country and lifted significant restrictions on international flights. A move that for traders meant China – the world’s second largest economy – was open again for business.

Since Saturday, more than 21 million in Beijing have been thrown back into lockdown.

Officials have reportedly reinstated lockdowns in Haidian and Chaoyang districts, with shops, schools and restaurants closed.

Travelers are also now required to be tested for the first three days of their visit and will remain indoors until given the all-clear – a measure that was scaled back earlier this month.

Because of this, Thompson wrote, Tesla is in trouble.

“Further delays in China’s post-Covid reopening is the last thing Tesla needs for two reasons,” he wrote.

“First, Tesla does not want a repeat of the Covid-zero factory shutdowns that have at times weighed on its production levels this year.

“Secondly – and more importantly – further economic weakness in China would be a real problem for distribution.”

According to the article, up to 700,000 of the 1.3 million to be delivered in 2022 will be sold in China.

Tesla also cut entry-level prices for Model 3 and Model Y by up to 9 percent in China in October in hopes of stimulating demand.

Musk’s seemingly all-consuming Twitter takeover could also spell bad news for Tesla as Covid dampens market optimism in China.

“As the bad news from China piles up, Tesla investors continue to digest the Twitter acquisition circus,” Thomson wrote.

“Twitter also drains Musk’s time and energy. And that is time and energy that should be put into guiding Tesla through a complicated environment.”

Tesla is recalling 321,000 vehicles

Tesla has recalled more than 321,000 vehicles in the United States over a taillight problem, in recent trouble hitting the electric vehicle giant led by controversial billionaire Elon Musk.

It’s the latest of several Tesla recalls in the United States in recent months, including one for just over 40,000 vehicles over a possible problem in the electric power steering system.

“On rare occasions” affected cars’ taillights will come on intermittently due to a software issue, the company said in a Nov. 15 document to the National Highway Traffic Safety Administration (NHTSA) released this weekend.

Brake lights, reverse lights and turn signals are not affected. Tesla is planning a free remote software update to address the issue on the affected 2020-2023 Model 3 and Model Y.

The company explains in the document that it was made aware of the issue by customers primarily outside the United States in late October, and confirmed its origin on November 7.

The automaker said it was not aware of any incidents or injuries related to the issue.

Tesla has already conducted multiple recalls in the US this year to remotely modify potentially problematic features.

At the end of September, the company is recalling more than a million vehicles because of the risk of injury when operating the car windows.

Musk credits the massive success of the Model 3 with proving that electric cars are the future, he said in a Delaware court this week while defending his $50 billion salary package as the company’s CEO.

Read related topics:China Elon Musk

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