The stock prices of electric vehicle (EV) makers and Tesla’s suppliers in Asia experienced a significant decline after Tesla missed its revenue and profit targets for the fourth quarter and warned of slower sales in the upcoming year. This article examines the repercussions of Tesla’s underperformance and its impact on the EV industry in Asia.
Following Tesla’s investor presentation, where it acknowledged the likelihood of slower vehicle volume growth in 2024, shares of its key suppliers in Asia experienced a noticeable decrease in value. South Korean display manufacturer, LG Display, which is known to supply car displays for Tesla’s Model 3, saw a decline of over 4% in its stock price. Battery suppliers LG Energy Solution, Samsung SDI, and Panasonic Holdings also encountered price drops of approximately 3.8% and 2% respectively.
Furthermore, Tesla’s competitors in Asia, such as BYD, encountered similar negative consequences. BYD, which surpassed Tesla as the world’s top-selling EV maker in the fourth quarter of 2023, experienced a price decline of around 2%. Despite this achievement, Tesla remained the leading seller of EVs on an annual basis, delivering over 1.8 million vehicles compared to BYD’s figure of just under 1.6 million.
The impact of Tesla’s underperformance reverberated through other EV makers in Asia. Nio, Xpeng, and Li Auto, three prominent EV manufacturers listed on the Hang Seng index, experienced substantial losses in their stock prices. Nio’s shares plummeted over 7%, while Xpeng and Li Auto encountered declines of 6.05% and 4.47%, respectively.
As the leading player in the EV market, Tesla’s performance has a ripple effect on the entire industry, making it a bellwether for other EV makers. The disappointing results and downbeat production outlook provided by Tesla had direct implications for its suppliers and other EV manufacturers in Asia.
Tesla’s fourth-quarter revenue increased by 3% to $25.17 billion, falling short of the expected $25.6 billion. Similarly, earnings per share came in at 71 cents, missing the anticipated 74 cents. However, the company’s net income for the same period more than doubled to $7.9 billion, primarily due to a significant one-time noncash tax benefit of $5.9 billion. This figure was more than twice the net income recorded in the same quarter of the previous year.
To conclude, Tesla’s underperformance and cautious sales outlook led to a considerable decline in stock prices for both its suppliers and other EV makers in Asia. As a pivotal figure in the EV industry, Tesla’s financial outcomes significantly impact market dynamics and serve as an indicator for the overall performance of the EV sector. The consequences of Tesla’s results serve as a reminder of the volatility and interconnectedness of the global EV market.