Tesla Inc. (NASDAQ: TSLA | TSLA Price Prediction) has sent a letter to U.S. Trade Representative Jamieson Greer stating that trade wars could threaten its financial future. If so, it could further damage the company’s already battered stock.
The letter noted that Tesla was one of many companies that could suffer from trade decisions. These could be “exposed to disproportionate impacts when other countries respond to US trade actions.” Nations targeted by trade wars might impose tariffs on goods imported from the United States, which means U.S.-made Teslas could cost consumers more in these countries. According to the Financial Times, the letter to Greer was unsigned.
The potential damage from trade sanctions adds to a long list of Tesla’s challenges. These have driven its stock down 40% this year and cost CEO Elon Musk tens of billions of dollars.
The most evident anxiety about Tesla of late is declining unit sales. Recently, UBS analyst Joseph Spak chopped his first-quarter delivery target to 367,000 vehicles from his previous forecast of 437,000. This is partly because Tesla’s sales dropped 76% in Germany. Similarly, they fell 45% in France and 55% in Italy.
In China’s largest electric vehicle market, aggressive local companies, led by BYD, have taken much of the EV market share. In the first two months of the year, Tesla sales fell 14% compared to the same quarter the year before. BYD’s sales rose 75%. Among the reasons, Straight Arrow News reports, “Lower prices offered by domestic brands have contributed to this shift. The average Tesla in China costs $33,500, compared to BYD’s median price of $16,700, and some models are as low as $9,700.”
Musk’s association with President Trump gets much of the blame for these sales drops, although the proof of that is anecdotal for now.
Whatever the reason for Tesla’s sales falloff, the effect of a trade war could make it worse.
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