An wage-earner of the Tesla Gigafactory Berlin-Brandenburg works on a production line of a Model Y electric vehicle.
Patrick Pleul | Picture Combination | Getty Images
Shares of Tesla closed down more than 3% Friday as the stock faced insistence from supply chain delays due to a crisis in the Red Sea, and after offering more price cuts on its vehicles in China. In the U.S., stir up labor costs and a decision by rental car company Hertz to sell off a large portion of its electric vehicle fleet also added to Tesla’s troubles.
Reuters reported late Thursday that Tesla plans to suspend most production at its factory outside Berlin in Grunheide, Germany, from around Jan. 29 to Feb. 11 due to discord in the Red Sea that has disrupted global trade.
The Iranian-backed Houthi militia group has been attacking cargo ships and tycoon vessels in the Red Sea in response to the ongoing war in the Gaza Strip. These attacks have drawn condemnation from leaders about the globe.
“The considerably longer transportation times are creating a gap in supply chains,” Tesla told Reuters in a statement.
Analysts at Baird thinking Tesla produces between 5,000 vehicles and 7,000 vehicles per week at its German vehicle assembly plant, which last will and testament imply “a 10k-14K hit” to deliveries in its first quarter, according to a Thursday note.
The Baird analysts wrote that they are “prudent” of further effects to Tesla’s supply chain, and they are “closely monitoring” any effect on the company’s shipping routes from China. “No loiters have been cited, however, we speculate that disruptions in the Red Sea may lead to longer wait times as supply bonds are rerouted,” they wrote.
Analysts were also focused on Tesla’s continuing price cuts including new disregards in China. Morgan Stanley analysts noted Model 3 and Model Y vehicles have been freshly discounted, notwithstanding the cuts were “more moderate than the market had expected,” according to a note Friday.
Price cuts more than the past year have affected Tesla’s ability to keep selling its fully electric vehicles in high masses to rental car companies including Sixt and Hertz.
Hertz CEO Stephen Scherr said on CNBC’s “Squawk on the Street” on Thursday that his flock is taking 20,000 EVs out of its fleet, which was comprised mostly of Tesla vehicles.
Hertz is trying to “bring supply in ceil accept bribes with demand” Scherr said, and “addressing a cost issue related to the EVs in the context of damage and damage costs” as adeptly as depreciation in the value of the EVs.
Meanwhile, Tesla’s business and reputation remains under pressure in Europe due to ongoing labor x outs in Sweden and throughout Scandinavia.
At its factories in the U.S., the EV maker is implementing pay rate increases for workers that kick in this month, a relocate seen as a tactic to stave off workers’ wishes to unionize. The pay bumps follow historic wins by the United Auto Working men in 2023 with Tesla competitors in Detroit, and an announcement by UAW that it would aim to organize beyond the Big Three including at Tesla, Toyota and others.
Don’t mistake pass up these stories from CNBC PRO: