Tesla shares drop $145bn in value on concerns for demand for electric cars   

EV giant has dialled back growth expectations

The retreat in Tesla's shares has erased about $145bn (€137bn) from the company’s market capitalisation.

Tesla shares are set to wipe out nearly one-fifth of their value in less than two weeks amid growing concerns that demand for electric cars is starting to weaken.

The selloff started earlier this month when the electric-vehicle giant dialled back growth expectations during its third-quarter earnings call.

That was followed by grim commentary from several global car makers, as well as Wall Street analysts.

This week, battery-maker Panasonic and chipmaker ON Semiconductor also sounded alarms for the electric vehicle, or EV, industry.

The warnings have weighed on stocks across the US automotive sector, which has also been battling extensive negotiations with its labour unions over wages.

Still, Tesla’s decline stands out: Shares have sunk around 20% since the October 18 report, compared to a 3.6% drop in the S&P 500 Index, and a more than 4% decline in the Nasdaq 100.

The retreat in Tesla's shares has erased about $145bn (€137bn) from the company’s market capitalisation.

“At the crux of the problem is a capital-intensive sector investing in unproven EV strategies amid a world of rising costs, lower prices, rising rates, and slower demand,” Morgan Stanley analyst Adam Jonas wrote in a note discussing the wider industry weakness.

“What investors seem to be waking up to today is the idea that the tens of billions of dollars invested in EVs may be value destructive rather than value accretive,” he said.

Bloomberg