How much of $1,000 invested in Tesla in early June returns vs. Chinese EV trio Nio, XPeng and Li Auto


Tesla, Inc. TSLA Shares have been under pressure since the start of the year amid the general market rout. Weakness continued into June, although most other stocks rebounded. Incidentally, Chinese electric vehicle stocks listed in the US have fared much better than their biggest rival.

Musk plays spoilsport: Part of Tesla’s weakness was due to uncertainty surrounding the impact of the Giga Shanghai lockdown on June quarter production and financials.

Giga Shanghai is a vital cog in Tesla’s growth story. The plant not only produces about half of Tesla’s output, but it also supports margin expansion. Given the low cost of labor involved in manufacturing at the factory, the cars that roll off its assembly line fetch a higher margin.

We can say that China Nio, Inc. NIO, XPeng, Inc. XPEV and Li Auto, Inc. LI have also encountered problems on this front.

The uncertainty surrounding Tesla’s CEO by Elon Musk offer proposal to take Twitter, Inc. TWTR Private is also weighing on shares of the electric vehicle giant. Tesla investors fear Musk will have to sell more of his stake in the company to fund the Twitter deal. Additionally, the specter of Musk’s split attention has not gone down well with investors.

To make matters worse, Musk’s announcement of layoffs, his confession to huge losses from Tesla’s new Gigas, and his commentary on a looming recession all began to work in unison to put pressure on the stock.

Related Link: Tesla’s Shanghai Giga Plant to Shut Down, Ford’s European Manufacturing Plans, Toyota Stumbles on Launch: The Week’s Top EV Industry News

Chinese negativity mitigates: Chinese equities, meanwhile, are benefiting from improved sentiment towards their outlook after prolonged and acute weakness. Amid the domestic softness, the Chinese government has shown its willingness to offer a helping hand. Subsidies for electric vehicles that were due to expire by the end of the year have been extended.

The fears of delisting which remained overhanging are much less talked about today.

Additionally, the underperformance relative to other stocks in the sector attracted bargain hunters.

Tesla Trails: Tesla may be the market leader in electric vehicles, but its performance has paled against the Chinese trio in the month to date.
A $1,000 investment in Tesla in late May would have returned 1.3 shares. Those 1.32 shares are currently valued at around $973, down 2.7%.

The returns of Nio, XPeng and Li Auto for the same period are positive at 38.5%, 50.2% and 62.7%, respectively.


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