'There's no wind, there's no storm, you know it's raining.'
Tesla Inc's decision to cut 20% production of the Model Y electric vehicle (EV) in Shanghai was enough to make investors sell the company's shares on fears of aggressive tightening policies returning.
The plan to cut production comes after the release of China's EV sales report in November, a 40% increase from the previous month with price cuts for the Model 3 and Y being the catalyst.
Tesla also managed to sell 100,291 EVs in November which is the best monthly sales since the opening of the factory in Shanghai during 2020.
However, the act of reducing production without any reason is clearly irritating investors.
Tesla has previously denied any news of production cuts at the Shanghai factory, its largest and most advanced facility in China, with investor inflows increasing since last August.
It is most likely that the reduction in production was made based on the situation of zero Covid-19 policy in China but Tesla has not yet given any statement in this regard.
As of this writing Tesla shares are trading 6.37% lower at $182.45, with strong US economic data adding to the pressure.
In the meantime, the contraction of Tesla shares pushed the Wall Street index to end weak after the economic data, namely the services PMI index of the ISM survey strengthened.
It also brought back market concerns about an aggressive rate hike by the Federal Reserve (Fed) at the last FOMC meeting of 2022 next week.
