Recently, European regulators have been looking into vehicle makers with support from subsidies. This has been specifically targeting Chinese car producers. Such firms may be hurting local EU companies, so restricting their activity here makes sense. Now, they have moved on to taking a look at Tesla, questioning its role in this area. However, Tesla stock investors do not seem to be worrying, and people seem to continue to buy Tesla stock. In fact, many of them already knew this investigation was coming, as the EU announced its plans beforehand.
Tesla cars going to Europe are not under investigation by EU regulators. The reason for this is that part of Tesla’s manufacturing is in Shanghai, China. It actually is its most productive manufacturing base. Therefore, the investigation has had overlaps with Tesla’s activities, as this plant serves the EU and Chinese markets.
Implications of China’s EV Subsidies and the Tesla Stock Situation
China’s massive subsidies have greatly helped its vehicle manufacturing sector. Now, electric cars from China are available everywhere for cheap. It is having an effect everywhere, as other competitors cannot match their prices. There is a lot of worry in European markets specifically. Therefore, to protect domestic industries, the investigations have made some conclusions. They seem to believe that imposing an import tax will offset the cheap prices for these vehicles. This would then lessen their competitiveness against local industries in terms of price.
Tesla stock has, in fact, gone down this Tuesday by 1.3%. However, this investigation may not be the reason for this loss. If you want to buy Tesla stock, it may still be worth it. The S&P 500 and Nasdaq also experienced considerable losses. There are specific factors we can identify for Tesla. However, that could affect those who buy shares in Tesla. The delivery estimates for Tesla have fallen somewhat. The original estimate of 473,000 deliveries dropped to 462,000. The difference between the highest and lowest possible estimate is 70,000, showing considerable uncertainty on the outcome for the third quarter. Is Tesla a good stock to buy? For now, the answer is up in the air.