Shares of Tesla Inc., the renowned U.S. electric car manufacturer, experienced a notable drop of nearly 5% on Monday, Oct. 30, in response to reports suggesting that Panasonic, a long-standing partner and supplier of Tesla, had scaled back battery cell production in Japan during the third quarter of 2023, covering the months from July to September.
Panasonic’s decision to reduce production of battery cells has raised concerns among investors about a potential downturn in demand for electric vehicles (EVs). This is particularly pertinent for more expensive EVs that may no longer qualify for tax incentives and other government programs in the United States and other regions. Panasonic’s battery cells are integral components in Tesla’s older EV models as well as their higher-end offerings, including the Model X SUV and Model S sedan.
Tesla’s Q3 2023 earnings release, unveiled on October 18, carried a cautionary note from CEO Elon Musk. Musk underscored the mounting pressure from rising interest rates, which have compelled Tesla to keep EV prices in check. Such pressure could have ramifications on consumers’ ability to purchase or lease Tesla’s EVs in the foreseeable future.
Moreover, Mr. Musk has repeatedly acknowledged that Tesla is grappling with several substantial challenges as it commences production of the highly anticipated Cybertruck. The Cybertruck has long been on Tesla’s roadmap and has generated significant public interest.
In the aftermath of Tesla’s Q3 2023 earnings disclosure, Tesla shares have seen a significant decline, with a drop of more than 18%, according to data from Ortex, a London-based financial data services company. Short sellers targeting Tesla have reportedly realized gains amounting to $3 billion as of the close of the market on Friday, Oct. 27. Concurrently, the value of profit-taking from short-term bets on Tesla shares reached approximately $180.8 billion, representing 3.21% as of October 27.
Investors and industry analysts are closely monitoring developments to gauge the long-term impact of Panasonic’s production cut and its potential implications for Tesla’s market position.