Tesla Inc (NASDAQ:TSLA) shares have taken a beating following a one-two punch of daunting geopolitical developments.
The electric car giant has been compelled to reduce prices in China amid increasing domestic and international competition, with the likes of Volkswagen and China’s Xpeng Inc (NYSE:XPEV) marking down their prices.
Compounding Tesla's challenges is the suspension of most production at its Berlin plant in response to ongoing pirate attacks in the Red Sea, which have disrupted global shipping routes and, consequently, Tesla's supply chain.
"The armed conflicts in the Red Sea and the associated shifts in transport routes between Europe and Asia via the Cape of Good Hope are also having an impact on production in Gruenheide," said Tesla in a statement. "The considerably longer transportation times are creating a gap in supply chains."
Tesla is far from alone in facing a supply chain crisis as Houthi rebels up attacks in the Red Sea, which have effectively cut off global access to the critical Suez Canal route.
In the UK, Tesco PLC (LSE:TSCO) and Next plc have warned of a material impact arising from the attacks.
Tesco boss Ken Murphy warned that the delays from sending ships the long way around South Africa could cause retail prices to go up.
Murphy said: “If they do have to go the whole way around Africa to get to Europe, it extends shipping times, it constrains shipping space and it drives up shipping costs.
“So that could drive inflation on some items, but we just don’t know.”
Tesla shares fell more than 3.2% in Friday’s pre-market trades.