Tesla stock continues to fall amid new China subsidy, Elon Musk’s Twitter focus

Tesla ( TSLA ) has brought back an insurance subsidy bought in China until the end of the year after a price cut in late October, as the EV giant tries to bolster demand amid a surge in production. Meanwhile, CEO Elon Musk continues to spend a lot of time with his newly acquired Twitter. Analysts say there are concerns that his tweets and moves could tarnish his image and, by extension, Tesla’s brand and Tesla stock.


Tesla stock continued to sell off on Tuesday, closing at a May 2021 low.

Tesla is also recalling more than 40,000 2017-2021 Model S and Model X vehicles due to a possible power-assisted steering function, Reuters also reported on Tuesday. Tesla is handling the recall through an over-the-air update.

Can Insurance Subsidy Boost Tesla Stock?

On Tuesday, Tesla announced an insurance subsidy in November of 8,000 yuan ($1,100) for those who buy its electric vehicles in stock as the company tries to ramp up orders. In December, the subsidy will drop to 4,000 yuan ($550).

Tesla previously introduced a 7,000 yuan insurance subsidy on all vehicles at the end of September as waiting times for its electrics dropped to virtually zero. Starting October 1, Tesla offers 0% down payments and preferential loan rates. These incentives served as de facto price cuts.

Tesla cut actual Model 3 and Model Y prices in China on October 24 by up to 9%. Following those price cuts in October, Tesla briefly removed the insurance subsidy it had implemented in September before reviving it on Tuesday.

Twitter distraction

Since Elon Musk took over Twitter on Oct. 28, he has cut roughly half of the social networking site’s staff while frequently tweeting about his plans, politics and more. There are concerns that Musk is being distracted from running Tesla, as well as concerns that it could damage his image, which could rub off on the Tesla brand. There is still some speculation that Musk will need to sell more Tesla shares to cover the cost of his Twitter acquisition.

Tesla China Deliveries

Tesla delivered 71,704 vehicles from its newly upgraded Shanghai factory in October, according to the China Passenger Car Association. That was up 32% from a year earlier, but down almost 14% from September’s record 83,135. Tesla exported a record 54,504 vehicles from its Shanghai factory in October and sold 17,200 in China.

The global EV giant reported deliveries of 343,830 cars in the third quarter, up 42% from a year earlier and above the first quarter’s record of 310,048. However, this was well below analysts’ estimates.

The company said it faced logistical challenges throughout the quarter and there were vehicles in transit.

Tesla produces the Model S luxury sedan, the Model X SUV as well as the Model 3 sedan and Model Y crossover. Other vehicles in the works include the Semi and Cybertruck. Musk said the Cybertruck is on track for a mid-2023 launch and that the Tesla Semi will begin deliveries by the end of 2022.

Start of semi-production

He tweeted in October that Tesla was starting production of the Tesla Semi truck trailers. Deliveries to PepsiCo (PEP) was scheduled to begin on December 1. Musk says the electric semi trucks will have a range of 500 miles per charge.

Tesla production is ramping up, especially in China, so demand needs to increase significantly in the fourth quarter and beyond to match supply. China’s EV subsidies expire on December 31st, while Germany will reduce its subsidies from January 1st. That should boost demand for Tesla and other EV makers, but could mean lower demand in the new year.

China’s unofficial vehicle registration data for the first week of the month shows the US electric giant rival BYD (BYDDF) with a large margin for total vehicle unit sales. New vehicle insurance registrations in China between October 31 and November. 6 totaled 110,539, up 43 percent from last year but down 12 percent from the previous week, CnEVPost reported Tuesday.

BYD, the world’s largest manufacturer of EVs and plug-in hybrids and the largest seller of pure electrics in China, led the way with 37,168 insurance registrations. Elon Musk’s Tesla was second with 11,195 registrations.

Chinese EV startups Neo (NIO), Li Auto (LI) and XPeng (XPEV) was far behind, but among the top 14 vehicle manufacturers.

Tesla stock

Tesla shares fell 1.7 percent to 193.76 in Tuesday trading, but were well off a session low of 186.75 as the broader market gained steam. Shares are down more than 40% year-to-date and near May 2021 lows, according to MarketSmith analysis.

Tesla stock has sold off hard following Musk’s Twitter acquisition.

Clash Of The Titans: Tesla Vs. BYD

The EV maker’s stock has a 46 Composite Rating of 99. TSLA stock has a dismal 17 Relative Strength Rating. The EPS score for Tesla stock is 75.

Please follow Kit Norton on Twitter @KitNorton for more coverage.


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