Big Trouble in Elon's China: Tesla Shares Face Turbulence Due to Communist Competitors STR/AFP via Getty Images

Tesla shares experienced a significant decline on Friday as the electric vehicle giant grapples with various challenges, particularly in its crucial Chinese market.

The Street reports that Tesla, the world's leading electric vehicle manufacturer, has been facing a series of setbacks that have led to a substantial drop in its stock value. The company's shares have already shed more than $240 billion in value this year, making it the worst-performing stock on the S&P 500. The latest slump comes amidst reports of production cuts at its Shanghai factory and intensifying competition in China.

According to Bloomberg News, Tesla has trimmed production at its Shanghai facility, reducing shifts for the Model Y midsize SUV and Model 3 sedan to five days per week from the usual pace of around 6 1/2 days. This decision comes as Tesla struggles with weaker-than-expected sales figures in China, where volumes fell to the lowest levels in more than a year last month.

CEO Elon Musk acknowledged the challenges posed by Chinese automakers during an investor call in January, stating, “Chinese car companies are the most competitive car companies in the world. I think they will have significant success outside of China depending on what kind of tariffs or trade barriers are established. Frankly, I think if there are not trade barriers established, they will pretty much demolish most other companies in the world.”

Tesla's profit margins, a closely watched metric by Wall Street analysts, have also been under pressure. The company reported a narrowing of margins to 17.6 percent over the three months ended in December, down from 23.8% percent in the year-earlier period. Tesla had previously warned investors that vehicle-delivery growth rates would be “notably lower” than 2023 levels, and that profit margins would improve only if central banks cut interest rates.

Despite the challenges, some analysts remain optimistic about Tesla's long-term prospects. CFRA analyst Garrett Nelson noted that while the “high-fixed-cost nature of auto manufacturing” continues to pressure Tesla's profit margins, declining battery costs could be a “silver lining” for the beaten-down shares. He also pointed out that the stock appears to have largely priced in these concerns and that there are potential catalysts on the horizon, such as the unveiling of Tesla's Next Gen EV model and Roadster later this year.

Read more at the Street here.

Lucas Nolan is a reporter for Breitbart News covering issues of free speech and online censorship.

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