Tesla shares tumble as COVID-19 slams China

Tesla shares continued to reel Tuesday amid investor concerns about a manufacturing slowdown at the electric car maker’s factory in China. 

The company’s stock fell 11.4% to close at $109.10, the lowest level since August 2020. It slid further in trading after markets closed. 

Tesla on Saturday suspended production at its plant in Shanghai, according to Reuters, which said that workers at the facility, as well as at some of its suppliers, had contracted COVID-19. China is grappling with a wave of illnesses after recently ending restrictions aimed at containing infections.  

Tesla’s stock has plunged nearly 70% this year, lopping more than $800 billion off the company’s valuation by investors. 

“With China the core linchpin to the Tesla bull thesis, worries are growing around what the softening demand picture looks like for 2023 given the dark macro clouds and increasing domestic [electric vehicle] competition,” Wedbush analysts said in a Tuesday report.

Shareholders and Wall Street analysts have also grown restive over Tesla founder Elon Musk’s recent focus on Twitter, which he bought in October for $44 billion. Musk, who last week suggested he is looking for a chief executive to lead the social media platform, has liquidated billions in Tesla shares after pledging earlier this year not to sell the stock.

In another sign of trouble at Tesla, the company last week doubled the discount on two of its top-selling models — the 2023 Model 3 sedan and Model Y SUV — to $7,500. Wedbush analyst Dan Ives said the move suggests consumer demand for the vehicles is softening amid mounting competition for electric cars.

The price cuts precede a new federal tax credit of up to $7,500 for people who buy an electric vehicle in 2023.

“At the same time that Tesla is cutting prices and inventory is starting to build globally in face of a likely global recession, Musk is viewed as ‘asleep at the wheel’ from a leadership perspective for Tesla at the time investors need a CEO to navigate this Category 5 storm,” Ives wrote in a research note on Tuesday after the latest dip in Tesla shares.

Shares of other electric vehicle makers also sank Tuesday, with shares of Rivian and Lucid Group each dropping more than 7% over concerns of weakening demand in China.

—The Associated Press contributed to this report.