Tesla Stock Plummets to Lowest Since May 2022 Following Giga Berlin Factory Issue

Tesla's (TSLA) shares have suffered a continuous two-day decline, dropping to levels last witnessed in May 2022. This plunge is the result of a series of unfortunate incidents affecting the electric vehicle (EV) manufacturer.

On Tuesday morning, an unexpected halt of operations occurred at Tesla’s Giga Berlin factory due to a power outage caused by an arson attack on a nearby power substation. As firefighters tackled the blaze, production was discontinued, and the factory evacuated, as confirmed by a Tesla representative. While no damage was incurred by the factory itself, the interruption of the power supply raised serious concerns.

Tesla’s stock depreciated by 3.9% on Tuesday, the lowest closing since May 19, 2022. The onset of the week saw a decrease of over 11% in the value of the stock, a significant downward trend reflecting a steep year-to-date descent of 27.3%.

Initially producing about 6,000 vehicles per week, Tesla’s Giga Berlin Factory is set to remain non-operational for several days until power is restored. This unfortunate situation came at a time when the expansion of the factory had been subject to immense disapproval eventually causing the plan to be rejected.

The responsibility for the disturbance in the factory was claimed by a left-wing activist group. Tesla CEO Elon Musk responded by remarking, "Stopping production of electric vehicles, rather than fossil fuel vehicles, ist extrem dumm," using the German phrase for "extremely dumb."

These challenges were further exacerbated by Monday’s concerns over Tesla’s performance in China. Shares fell over 7% due to unsatisfactory China shipments and subsequent mainland price cuts, indicating potential demands issues.

Tesla disclosed a figure of 60,365 vehicle shipments from their Giga Shanghai factory in February according to preliminary data from China’s Passenger Car Association (PCA). This represented a downturn of 16% from the previous month, a 19% decline from the previous year, and the smallest shipment totals since December 2022.

Such dwindling numbers are concerning for Tesla, given that China represents a significant growth market for the EV maker. February sales for China's BYD, which typically dominates the Chinese EV market and had previously surpassed Tesla in Q4 EV sales, also suffered a 37% drop.

Furthermore, Goldman analyst Mark Delaney has reduced his profit forecasts for Tesla for 2023 and 2024. Delaney highlighted falling profit margins as an ongoing issue due to persistent price cuts over the next two years. However, he maintained a positive outlook on Tesla's industry leadership and long-term growth potential, along with a $275 price target and a neutral rating on the stock.