Tesla shares plummet as China struggles with reopening post-Covid

While tech billionaire Elon Musk has his hands full with Twitter, another of his major money-makers is having big issues of its own.

While Tech billionaire Elon Musk seemingly has his hands full with his $67 billion takeover of Twitter and the fallout since, another of his ventures, arguably his bread and butter, is having troubles of its own.

Shares in Musk’s electric vehicle production company Tesla fell 6.8 per cent on Monday night, hitting its lowest levels in two years.

In an op-ed published in the Australian Financial Review, Chanticleer columnist James Thomson drew a link to China’s precarious scaling back of its Covid-Zero policy which dictates its pandemic response restrictions, including lockdowns and travel.

Tesla shares took a 6.8 per cent hit on Monday night. Picture: Justin Sullivan

China’s stock market surged in early November after authorities finally made moves to easy to ease one of the world’s most restrictive Covid-19 crackdowns.

On November 11, China officially reduced quarantine times for travellers entering the country and abolished significant restrictions on international flights. A move that meant for traders, China – the second largest economy in the world – was back open for business.

Since Saturday, more than 21 million around Beijing have been plunged back into lockdown.

Officials have reportedly reinstated lockdowns in the Haidian and Chaoyang districts, with shops, schools, and restaurants closed.

Travellers now also need tests for the first three days of their visit and stay inside until they are given the all-clear – a measure that was scaled back earlier in the month.

For this reason, Thompson wrote, Tesla is in trouble.

“Further delays to China’s post-Covid reopening are the last thing Tesla needs, for two reasons,” he wrote.

“First, Tesla does not want a repeat of the Covid-zero factory shutdowns that have weighed on its production levels at times this year.

“Second, – and more importantly – further economic weakness in China would be a real worry for sales.”

According to the article, of the 1.3 million to be delivered in 2022, up to 700,000 to be sold in China.

Tesla also cut starter prices for Model 3 and Model Y cars by as much as 9 per cent in China in October in hopes of stimulating demand.

‘Musk’s Twitter takeover could also spell bad news for Tesla’. Picture: Noam Galai

Musk’s seemingly all-consuming Twitter takeover could also spell bad news for Tesla as Covid dampens market optimism in China.

“As bad news from China builds, Tesla investors must also continue to digest the circus that is the Twitter takeover,” Thomson wrote.

“Twitter is also a drain on Musk’s time and energy. And this is time and energy that should be poured into steering Tesla through a complicated environment.”

Tesla recalls 321,000 vehicles

Tesla has recalled more than 321,000 vehicles in the United States because of a tail light issue, in the latest trouble to hit the electric vehicle giant led by controversial billionaire Elon Musk.

It is the latest of multiple Tesla recalls in the United States in recent months, including one for just over 40,000 vehicles for a possible problem in the electric power steering system.

“In rare instances,” the rear lights on affected cars light up intermittently because of a software problem, the company said in a document to the National Highway Traffic Safety Administration (NHTSA) dated November 15 but made public this weekend.

Tesla’s share price is falling.

Brake lights, backup lights and turn signals are not affected. Tesla plans a free remote software update to fix the problem on the affected Model 3 and Model Y 2020-2023 cars.

The company explains in the document that it was alerted to the problem by customers mainly outside the United States in late October, and confirmed its origin on November 7.

The automaker said it was not aware of any incidents or injuries related to the problem.

Tesla already made several recalls in the United States this year to remotely modify potentially problematic features.

At the end of September, the company recalled more than one million vehicles because of a risk of injury in operating the car windows.

Musk credits the massive success of the Model 3 with proving that electric cars are the future, he told a Delaware court this week as he defended his $50 billion pay package as CEO of the company.