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Tesla's tumble: This week in EVs

Published Oct 22, 2023 15:32
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Investing.com -- Here is your weekly Pro Recap of the past week's biggest headlines in the electric vehicle space: Tesla to exercise caution, see big share drop; OSHA proposes fines on GM battery plant.

As always, InvestingPro users got these headlines at lightning speed. Never miss another opportunity to secure an edge for your portfolio.

Tesla ramp tilts downward; shares drop precipitously

Tesla (NASDAQ:TSLA) shares tanked Thursday after the company reported a top- and bottom-line miss - earnings per share of $0.66 fell $0.07 short of consensus, and revenue of $23.35 billion was also lower than estimated - and after cautious commentary by CEO Elon Musk.

Musk's once-optimistic stance on Tesla as "recession-resilient" appeared to waver amid the significant revenue shortfall, its largest miss in over three years, even after the company had implemented substantial price reductions.

Expressing concern about rising borrowing costs and their potential effect on the accessibility of Tesla vehicles, Musk said that, despite substantial price cuts, the company would hold off on accelerating its scheduled expansion of the Mexican factory until there is more clarity regarding the state of the economy.

The new cautious approach looks to align with that of Detroit-based auto industry giants General Motors (NYSE:GM) and Ford (NYSE: NYSE:F), which have adopted a restrained strategy in expanding their EV production capacity, citing economic uncertainties and a possible decline in demand.

On Tuesday, for instance, GM announced its decision to postpone the production of the Chevrolet Silverado and GMC Sierra electric pickup trucks at a Michigan plant by a year, citing a stagnation in EV demand.

And Ford recently announced its intention to temporarily scale back one of the three shifts at the facility responsible for producing its electric F-150 Lightning pickup truck. The move followed the company’s decision to slow down its EV expansion and to redirect investments toward commercial vehicles and hybrids.

Tesla's caution triggered a more-than 9% plummet in its shares on Thursday, signaling growing apprehension about the sustainability of the company's growth trajectory.

To meet its annual goal of delivering 1.8 million vehicles, Tesla is expected to implement additional price reductions even despite a narrowing of the company's gross margin: That figure contracted from 25.1% in the same period the previous year to 17.9% between July and September.

That contraction, along with the anticipated launch of the Cybertruck - which Tesla announced would take place on November 30 at its Texas Gigafactory - have amplified investor concerns about Tesla's profitability.

Consequently, 10 analysts have slashed their price targets on the stock, setting the median view at $260 according to LSEG data, amid doubts about Tesla's ability to maintain its exceptional expansion.

Overall, shares of TSLA ended the week down 15.4% to $211.99

InvestingPro

OSHA not fine with GM battery venture

The Occupational Safety and Health Administration (OSHA) recommended fines amounting to $270,000 on Ultium Cells, the joint venture battery plant in Ohio operated by General Motors and LG Energy Solution (KS:373220).

The recommendation follows an investigation that revealed the company's failure to adequately train workers in safety and emergency response protocols, as well as non-compliance with federal standards for the use of personal protective equipment, leading to employee exposure to hazards.

In response to the recommendation, Ultium Cells emphasized its commitment to safety and requested a hearing with OSHA.

OSHA additionally issued a hazard alert letter, urging the company to take voluntary steps to minimize the accumulation of metal dust and to enhance employee protection from potential exposure to hazardous metal dust.

The safety administration specified that Ultium must implement mandatory machine guarding, offer training to workers on hazardous energy control and emergency response protocols, and make other necessary adjustments.

OSHA is currently conducting an ongoing inspection at the Ultium facility following a fire incident on June 27, along with three other inquiries. One of these investigations pertains to an incident in August in which workers were reportedly exposed to chemicals due to a pressure gauge failure, resulting in battery slurry leakage on the plant floor.

Since the venture’s establishment in 2022, OSHA has issued a total of 11 citations against the plant.

Shares of GM ended the week down 0.76% to $29.65 after reaching a weekly high of $30.58 on Tuesday.

InvestingPro | Anticipate Market Trends With Breaking News

Tesla's tumble: This week in EVs
 

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