Elon Musk's Tesla stock experienced a major decline following a startling decision in China, making it the worst-performing stock on the S&P 500.
Per Reuters, Tesla reduced its car production in China amid slower growth in electric vehicle (EV) sales and intensified competition in the market. Particularly, the U.S. electric vehicle maker instructed employees at its Shanghai factory to lower output of both the Model Y sport utility vehicle and Model 3 sedan by working five days a week instead of the usual 6-1/2 days.
According to The Street, the decision, announced on Tuesday, signaled a departure from Tesla's previous strategy. The report suggested that Tesla has lost over $240 billion in value this year alone, largely attributed to its approach of prioritizing market share over profits and the diminishing demand for electric vehicles globally.
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Analysts have noted Tesla's warning to investors about lower-than-expected vehicle-delivery growth rates and CEO Elon Musk's comments linking profit margin improvements to central bank interest rate cuts.
Additionally, declining sales figures in China and a wave of domestic competition further pressure Tesla's ambitious delivery targets.
Despite these challenges, analysts remain divided on Tesla's future prospects, with some emphasizing potential catalysts such as the announcement of new models. In contrast, others express caution regarding the company's ability to top the electric vehicle market once again.
Tesla has not yet responded to requests for comment on this matter.
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