Biplab Das 
Tesla (TSLA.O) shares experienced a 5% decline on Monday following a noteworthy announcement from key supplier Panasonic Holdings (6752.T), which disclosed a reduction in automotive battery production for the September quarter. The move has heightened concerns about a global slowdown in electric vehicle (EV) sales.
Panasonic’s Production Challenges
Panasonic attributed its production cutback to a decrease in demand for high-end EVs, especially in North America. This mirrors comments made by Tesla CEO Elon Musk earlier in the month, expressing his apprehensions about the impact of elevated borrowing costs on vehicle demand.
Market analysts noted that “Panasonic’s warning of soft demand for Tesla’s Model S and Model X cars has many concerned that the global economic outlook could be in worse shape than initially believed.”
General Motors Reaches a Deal
On the same day, General Motors achieved a tentative agreement with the United Auto Workers (UAW) union, a milestone that follows similar deals by Ford Motor and Chrysler-owner Stellantis. This development is potentially putting an end to disruptions that some analysts had suggested could have provided Tesla with a competitive advantage.
Tesla’s Share Performance
Since the UAW strike began, Tesla’s shares have experienced a 34% decline, in comparison to a 30% to 33% drop in shares of Ford Motor (F.N) and General Motors (GM.N). Conversely, Stellantis’s (STLAM.MI) shares have shown a 33% rise.
Notably, Tesla investor Gary Black attributed the decline in Tesla shares to the chipmaker Onsemi’s (ON.O) downbeat forecast. He highlighted ON’s significant role as a supplier to major players in the automotive industry with over 50% market share in global EV sales, including four of the top five China EV manufacturers.
Challenges for Onsemi
Onsemi CEO Hassane El-Khoury explained that the company’s top European clients are actively working to clear their inventory. He also pointed out the “increasing risk to automotive demand due to high-interest rates.”
Impact on Tesla’s Gross Margin
Weakened demand poses additional challenges to Tesla’s gross margin, which shrank to 17.9% from 25.1% in the same quarter last year. The EV maker’s aggressive price cuts played a significant role in this contraction, triggering a price war in key markets, particularly China.
Valuation Comparison
Currently, Tesla is trading at approximately 56 times its 12-month forward earnings estimates, in contrast to Ford’s 5.6 times and General Motors’ 4.1, as indicated by LSEG data. This stark disparity reflects the different perceptions and expectations for the future performance of these automakers.
