Chinese property developer Evergrande is threatening to default on $300 billion in debts, which could affect the global economy. Many stocks were down on Monday morning, and electric vehicle stocks, which have performed well over the past several years, are not bulletproof to the slide.
At the time of writing, Tesla shares were down $30.95, or just over 4%.
Due to Evergrande’s status as a Chinese company, the massive default is sending shockwaves through many companies that operate within the region. Tesla is one of them. Operating in China since early 2020, the electric automaker has a dedicated production facility known as Giga Shanghai, where the Model 3 and Model Y are manufactured. Tesla has maintained a status as one of China’s best-selling electric car companies since its introduction to the market, and earlier this year, the plant transitioned to somewhat of an export hub for the company. Tesla shipped Model 3 and Model Y builds from China to Europe, combating excessive demand in the continent as Giga Berlin nears completion.
The NTSB also issued a statement indicating Tesla should address safety issues with Full Self-Driving and Autopilot before deploying major software upgrades. NTSB head Jennifer Homdendy told the Wall Street Journal in an interview that “Basic safety issues have to be addressed before they’re then expanding it to other city streets and other areas.” This may have also contributed to Tesla’s slight pullback.
Tesla was not the only automaker to fall on the Evergrande news. Additionally, Xpeng, Li Auto (NASDAQ: LI), and Nio all declined. Li Auto’s pullback may be attributed to the company lowering its third-quarter deliveries as semiconductor and parts shortages continue to plague global automakers.