As Xiaomi releases its first EV, Tesla is in a ‘code red situation’

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Tesla Inc (NASDAQ: TSLA) is in the red on Thursday after Xiaomi priced its first electric vehicle at far less than the Model 3.

Dan Ives shares view on Tesla stock

Its SU7 also trumps the Model 3 on over 90% of the specifications, as per Lei Jun – the chief executive of Xiaomi. On CNBC’s “Squawk Box”, Dan Ives of Wedbush Securities said today:

This is a code red situation for Tesla. They are going through some dark days in China from a demand perspective. They clearly need to lay out a strategy for investors.

From the very beginning of the construction of our Xiaomi EV factory, we prioritized minimizing our environmental impact. We've covered the roof with solar panels, generating a remarkable 16.4M kWh of clean electricity per year. We also maintain strict exhaust gas control,… pic.twitter.com/VFKNc6iFBk
— Lei Jun (@leijun) March 28, 2024

Deliveries in China will likely come in up to 4.0% down for the first quarter due to the ongoing price wars, he added.

Tesla stock is down 30% year-to-date ahead of its Q1 deliveries update scheduled for next week.

$TSLA could lose investors’ faith

Dan Ives agreed on the CNBC interview that he underestimated “just how quickly demand will come off” for Tesla Inc in China.

The Wedbush analyst likened earnings calls of the electric vehicle behemoth to “Nightmare on Elm Street” ever since Zach Kirkhorn – its chief of finance stepped down in August of 2023.

Watch here: https://www.youtube.com/embed/X2zmLonWG3E?feature=oembed

And if $TSLA does not lay out a proper strategy, “a lot of investors will start to lose faith”, he added on Thursday.

But with a clear and reliable turnaround strategy, the long-term prospects for the Nasdaq-listed firm remain strong as ever. That’s why Ives still has a $300 price target on Tesla shares.

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