Tesla CEO Elon Musk.
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Tesla shares are lower again, adding to Friday’s significant decline, as investors weigh the impact of another tweet from CEO Elon Musk and focus on factors that might hurt the EV company’s earnings in 2022.
Sunday, Musk said that Tesla (ticker: TSLA), as well as his privately held space company SpaceX, were seeing “significant recent inflation pressure in raw materials and logistics,” adding in a subsequent tweet, “and we are not alone.”
News of inflation for raw materials shouldn’t come as a shock to anyone. The price of a basket of metals, including cobalt and nickel, that go into making EV batteries, for instance, is up roughly 70% year to date. Those prices are available to anyone who chooses to look.
Still, the comment from Musk is making investors think about the potential impact on 2022 profit margins. Tesla stock was down 1.1% in premarket trading Monday, while futures on the S&P 500
futures were up 0.3%. Given that futures on the Dow Jones Industrial Average had slipped 0.1% and Nasdaq Composite futures were off 0.3%, the move in Tesla stock isn’t too surprising.
But Tesla shares fell more than 5% on Friday, finishing the week down 5.1%. That drop after reports that Tesla was struggling to scale up the production of its new 4680 battery cells, with a diameter of 46 millimeters and a length of 80 millimeters, that will replace cells with a diameter of 21 and a length of 70.
Tesla believes the larger cells will help it reduce battery costs by up to 20%.
Tesla didn’t respond to a request for comment about the batteries or how inflation might affect its 2022 results.
Batteries and inflation are likely the biggest issues on investors’ minds, but the performance of other EV stocks might also be weighing on the shares. NIO
(NIO) stock dropped almost 14% last week as fear over the potential U.S. delisting of Chinese stocks arose again.
The Securities and Exchange Commission announced five U.S.-listed Chinese companies that didn’t meet U.S. auditing standards. None of them were EV firms, but the U.S. listed Chinese EV stocks sold off anyway.
Coming into Monday trading, Tesla stock was off about 25% year to date. Shares were about 36% below their November 52-week high of more than $1,243.
Write to Al Root at [email protected]
