Tesla (TSLA) gets a lot of attention from stock investors. When news hits about the EV pioneer, people react fast — and its moves can affect the whole market.

Thursday was a weak day for Wall Street, as enthusiasm for meme stocks turned into nervousness about recent gains being unsteady. Losses for the Dow, S&P 500, and Nasdaq were not great, but a surprise announcement from Tesla during the day seemed to rock the market’s sails and might point to troubling times ahead not just for Tesla but for overall markets.

Tesla double trouble

Tesla shares lowered by over 5% on Thursday. The shareholders of Tesla were forced to face a couple of problems that might threaten the EV company’s leadership spot.

Early on Thursday, Tesla announced a couple of recalls. One covers around 5,500 Model Y and Model 3 vehicles, as the car maker moves to make sure that fasteners holding the seat belts for front-seat riders are securely attached. A second recall is for around 2,200 Model Y SUVs, and will involve a similar issue that might possibly affect seat belts in the vehicles’ second rows.

Those announcements come after Tesla put out another recall earlier in the week. The concerns there were about brake caliper systems that might come loose and lead to tire pressure loss, and is connected to almost 6,000 Model Y and Model 3 vehicles.

More harmful issues that Tesla must contend with involves a report that the company’s order volume from China was lower by around half in May from its April levels.

Citing sources inside the company, the report said that Chinese orders for Tesla vehicles lowered to 10,000 vehicles, down from 18,000 vehicles in April and 21,000 from March.

This certainly calls into consideration if Tesla is maintaining its competitive edge overseas.

In China, the company faces lots of competition from domestic car makers like XPeng (CPEV) and NIO (NIO). Having made a Gigafactory in Shanghai, Tesla is hoping for and relying on high demand for its vehicles in China. If that demand does not come as expected, it might lead to huge implications for the company’s growth not just in China, but throughout the whole Asia region.

Author: Steven Sinclaire

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