Tesla erases US$145 billion in valuation as carmakers, Wall Street analysts sound alarms for EV industry
- Tesla’s shares have sunk more than 17 per cent since the EV giant dialled back growth expectations during its third-quarter earnings call on October 18
- Investors are beginning to realise that the huge investments in EVs may be value destructive rather than value accretive, Morgan Stanley’s Adam Jonas says
The sell-off started earlier this month when the EV giant dialled back growth expectations during its third-quarter earnings call. That was followed by grim commentary from several global carmakers, as well as Wall Street analysts. This week, battery-maker Panasonic Holdings and chip maker ON Semiconductor also sounded alarms for the EV industry.
The warnings have weighed on stocks across the US car sector, which has also been battling extensive negotiations with its labour unions over wages.
Still, Tesla’s decline stands out: shares have sunk over 17 per cent since the October 18 report, compared to a 2.8 per cent drop in the S&P 500 Index, and a 3.4 per cent decline in the Nasdaq 100. The retreat in the EV-maker’s stock price has erased about US$130 billion from the company’s market capitalisation.
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“At the crux of the problem is a capital-intensive sector investing in unproven EV strategies amid a world of rising costs, lower prices, rising rates and slower demand,” Morgan Stanley analyst Adam Jonas said in a note discussing the wider industry weakness on Tuesday.