Tesla knocks down $145 billion in value due to poor demand and worries about the EV industry

 Tesla knocks down $145 billion in value due to poor demand and worries about the EV industry

According to Bloomberg, Tesla Inc. shares have seen a sharp decrease, shedding about one-fifth of their value, or $145 billion, in less than two weeks. It went on to say that growing concerns about a decline in the market for electric cars (EVs) are the cause of this decline.

The EV sector as a whole has suffered, but Tesla's fall has been especially sharp, with shares down more than 17 percent since the October 18 announcement. On the other hand, the Nasdaq 100 plummeted by 3.4 percent and the S&P 500 Index declined by 2.8 percent. Consequently, the decline in Tesla's stock price has erased about $130 billion from the company's market value.

Industry Fears about EVs

This month's decline started when Tesla lowered its growth projections during its third-quarter results call. Pessimistic remarks from Wall Street experts and a number of multinational automakers followed this action. 

Recently, ON Semiconductor Corp. and Panasonic Holdings Corp., two companies that create chips, have voiced reservations over the EV market.

Stocks in the US car industry, which is already dealing with labor union pay disputes, have been impacted by these warnings. 

Tesla Faces Serious Risks

Tesla is a pure-play electric vehicle company with a high market capitalization. Despite being pricey, its share price is largely dependent on its profitability and ability to hold onto its leading position in the EV industry. 

However, investors' concerns are growing as EV demand levels off and Tesla's dramatic price reduction seem to be losing their impact on demand, which is what caused the share price to drop sharply.

In spite of these difficulties, Tesla saw a significant uptick in value around lunchtime in New York. This comeback came after the business successfully defended against allegations that it was the cause of a deadly accident four years before using its Autopilot system. Consequently, on Tuesday, October 31, Tesla's shares finished 1.8 percent higher at $200.84.

Obstacles Abound

A crucial problem identified by Morgan Stanley analyst Adam Jonas is that a capital-intensive industry is investing in EV techniques that have not been proved in the face of declining pricing, rising costs, rising interest rates, and falling demand. Investors are starting to wonder whether the billions spent on electric vehicles will out to be harmful rather than beneficial.

The cost of owning a vehicle has increased owing to high loan rates, which has cast a shadow on the auto industry as a whole. Consumers are finding it more difficult to finance large purchases due to growing prices and the inadequate charging infrastructure of EVs.