Tesla (NASDAQ:TSLA) stock has been battered so fall in the fall season. Its shares dropped 4.79% on Monday, October 30. The trading session saw shares of the luxury electric vehicle (EV) manufacturer fall to their lowest levels in five months. While general volatility may be partly to blame, there are larger issues at play in the broader EV market that may be of concern for Tesla going forward.
Coming into the 2020s, Tesla had established itself as a dominant player in the young EV space. However, some experts and analysts voiced their concerns that Tesla would find itself in uncharted and potentially very dangerous waters as many of the world’s top automobile manufacturers were now aggressively entering the EV space.
Panasonic Holdings, one of Tesla’s key suppliers, said in late October that it cut automotive battery production in the previous month’s quarter. That spurred further worries about overall demand in the EV industry. While many are excited about the EV transition, others have cited the concerns and costs that come with owning these automobiles.
Beyond the prestige that comes with driving a “green” vehicle, avoiding filling up on high prices at the pump has been cited as a great feature of EVs. However, a lithium-ion battery typically lasts around five years, or at least 2,000 charging cycles. Meanwhile, a replacement lithium-ion battery for an EV can run between $5,000 and $20,000. That is a gigantic expense for the average US citizen.
Panasonic’s retreat suggests that demand for the Tesla Model S and Model X are lower than originally expected. Moreover, this could mean that the global economy is in far worse shape than analysts believe. Tesla will be forced to navigate difficult headwinds in the months ahead.