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Tesla Shares Plunge When Elon Acquires Twitter And India Says No To EVs Imported From China – By ASC


The combination of Musk’s acquisition of Twitter and India’s refusal to allow Chinese -made imports of Teslas has caused investors concern.

Teslas shares have plunged 9 percent in the last two days

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Teslas shares have plunged 9 percent in the last two days

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Tesla has been showing pretty good performance in recent times. It has record deliveries and its cash flow levels are at record levels. This is despite almost every carmaker in the world betting on EVs and competition is increasing dramatically. It was also during the global semiconductor crisis that Tesla was navigating quite skillfully. It also had to be content with the new fourth wave of COVID19 which triggered a closure in China, at Tesla’s export hub – Shanghai Gigafactory, which did not affect its shipments and revenue. Still, the stock was down 9 percent massively. What happen? Two things happen in a day or so.

First, despite opening its Berlin giga plant and a second plant in Texas, the Shanghai plant is key for it – as it remains its export hub and central to its ambitions in Asia. And apart from the US and China, the biggest market for cars is also in Asia – India. But Tesla has been talking about launches in India since 2015 but that has never happened and Musk has admitted to himself that it has challenges with the Indian government.

The Indian government is willing to lay the red carpet for the launch of Tesla – but on the condition that it creates a plant in India. Despite some suggestions, Tesla is not seriously considering building a plant in India. It has these Gigafactories which are among the largest buildings in the world. It only has four of them because they have been designed to serve not the country but the continent. Maybe one day Tesla might have to make a Gigafactory in India, but that time is not in the near future.

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Gadkari said manufacturing in China and sales in India were untenable.

But this week Indian Road Transport and Highways Minister Nitin Gadkari closed the door completely on Tesla’s ambitions to import its cars into India. India has some of the strictest import taxes on cars, which is why major global carmakers like Mercedes Benz, Volkswagen and Hyundai see India as an EV hub with local factories producing EVs for the country.

Tesla not only wants import duty relaxation, but it also wants to import from Shanghai Gigafactory which makes sense as it is the closest Gigafactory to India and its hub for Asia. But the problem is that India has a very contentious relationship with China especially since the border dispute flared up again in 2020. India has banned a large number of Chinese apps like Tik Tok in the country and has tightened the screw on Chinese consumer electronics brands like Huawei and Xiaomi.

While in the world of consumer electronics, China is a world factory, for India, most of these Chinese OEMs set up local manufacturing hubs in India in tandem with contract manufacturers like Foxconn. Even the iPhone 13 is now made in India. Make in India has been a tent pole policy for Narendra Modi’s government and with the added complexity of hostilities with China, there has been a reluctance against Tesla to be granted any tax relief especially if the imported vehicles will be made in China.

Moreover, India has been a manufacturing hub for the global automotive leviathan for a while. Longer than tech monsters. If the government allows Tesla’s tax exemption, then it will have to offer the same to Mercedes Benz which will launch an Indian -made EQS soon.

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Musk has acquired twitter for $ 44 billion

Nitin Gadkari stated this briefly at a recent government conference. “Making in China and selling here is not a good suggestion,” he said emphatically. These unpleasant comments have frightened investors. And although Tesla is the largest carmaker by assessment, its products are not suitable for India where the average price of a vehicle is sub Rs 10 lakh. The Tesla Model 3 even without tax is for Rs 30 lakh. The market is already small now and that is why it is looking for tax relief.

Musk even recently noted that plans to make sub $ 25,000 cars have also been put on rear burners – perhaps realizing that a country like India where such products may have a certain scale will push for local manufacturing. While this is happening, competition is quickly taking advantage. Hyundai is set to launch the Ioniq 5 which will be made in India in the second half of this year while its subsidiary Kia will launch the EV6 soon. Local players like Tata Motors are already enjoying the advantage of first movers and longtime Indian market leader Maruti Suzuki has also announced a massive investment for EVs for India.

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Teslas has been in testing for the Indian market but nothing seems to be moving

Investors see India as a missed opportunity for Tesla’s long -term health. Some claim Tesla’s trillion -dollar valuation is already too high. Compounding this issue is a small fact about Twitter’s $ 44 billion acquisition of micro -blogging service. Musk is already the CEO of not only Tesla but SpaceX and he is also behind Boring Company and Neural Links. He already has a lot on his plate. And now Twitter’s acquisition not only serves as a further distraction from Tesla, but could also direct some unwanted scrutiny against Tesla as it is one of the largest social media platforms in the world. Musk now has to balance things out – not just timing, but trying things that are good for Tesla versus Twitter in its dealings with the government – especially hardline governments like China.

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Twitter Musk’s purchase also came with a $ 12.5 billion loan against its Tesl shares. In the event of a mistake, he could be forced to liquidate a large number of Teslanya shares in a bid to acquire Twitter. This is a risk even for the richest man in the world whose wealth is closely linked to Tesla’s financial health and to a lesser extent SpaceX. Investors are clearly anxious and thus a 9 percent decline in the value of Tesla in the last few days.

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