(CTN News) – After offering more price cuts in China, Tesla shares fell as much as 4% Friday morning due to supply chain delays caused by a Red Sea crisis. Additionally, Tesla’s woes were exacerbated by the sale of a large portion of its electric fleet to rental car company Hertz in the U.S.
Due to conflict in the Red Sea thatglobal trade, Tesla plans to suspend most production at its factory outside Berlin in Grunheide, Germany, from around Jan. 29 to Feb. 11.
Houthi militias backed by Iran have attacked cargo ships and merchant vessels in the Red Sea due to the Gaza Strip war. Leaders have condemned these attacks globally.
In a statement, Tesla said that significantly longer transportation timesa gap in supply chains.
In a Thursday note, Baird analysts estimated produces between 5,000 and 7,000 vehicles per week at its German vehicle assembly“a 10K-14K hit” its first quarter deliveries.
Baird analysts wrote that they are “wary” of any further effects supply chain and are closely monitoring any changes to the company’s shipping routes from China. “There have been no delays cited, however, as supply chains are rerouted in the Red Sea, we speculate there may be longer wait times,” they wrote.
In addition to Tesla’s price cuts, analysts also paid attention to China’s new discounts.
The price cuts were “more moderate than the market expected,” Morgan Stanley analysts noted in a note Friday.
As a result of price cuts over the past year, Tesla has been unable to continueelectric vehicles to rental car companies such as Sixt and Hertz high volumes.
On Thursday, Hertz CEO Stephen Scherr announced the company would remove 20,000 electric vehicles from its fleet, mostly. Scherr said Hertz plans to “bring supply in line with demand” andto EVs and damage costs.
Tesla’s business and reputation in Europe remain under pressure due to ongoing labor strikes in Sweden and Scandinavia.
The automaker is increasing wages at its U.S. factories starting this month, a move seen as a tactic to stave off unionization efforts. Following historic victories in 2023competitors in Detroit, the UAW announced it would aim to organize beyond the Big Tesla, Toyota, and others.