Tesla Inc (NASDAQ:TSLA) shares are diving lower Monday. The electric‑vehicle market seems to be weakening, and there are growing concerns about the company’s core automotive business.
- Tesla stock is showing notable weakness. Why are TSLA shares down?
EV Demand Continues To Slide
U.S. EV sales plunged 30% year‑over‑year in January, making up just 6% of all new car sales, according to Barron’s. The loss of the $7,500 federal tax credit at the end of September has significantly dampened demand.
Automakers have responded to weaker demand by cutting prices. Average EV selling prices fell 3% year‑over‑year in December. Cantor Fitzgerald analyst Andres Sheppard expects lower pricing to remain a major theme this year, which could continue to squeeze Tesla’s margins.
The Cash Flow Concern
Investors are also paying attention to Tesla’s core car business — the company’s main source of revenue. Tesla plans to spend around $20 billion on new equipment this year to support its ambitions in robo‑taxis and robotics. That’s roughly double its typical annual spending.
This increase in spending comes at a time when Tesla’s automotive business is already under pressure, raising doubts about whether the company can generate enough cash to support its AI‑driven ambitions without a rebound in vehicle sales.
Technical Picture Shows Weakness
Tesla is currently positioned below its key moving averages, indicating a bearish sentiment in the market. With Tesla trading 5.9% below its 20-day SMA and 10.3% below its 50-day SMA, traders should be cautious as this setup suggests potential weakness.
The RSI is currently at 42.84, which is considered neutral territory, indicating that Tesla is neither overbought nor oversold. Currently, MACD is above its signal line, which points to bullish momentum in the short-term. This could be a positive sign for traders looking for potential upward movement, but they should remain vigilant given the stock’s overall position relative to its moving averages.
Key support is at $387.50, while resistance is at $436.50. If Tesla tests the support level, it could signal a potential reversal or continuation of the current trend, while a breach of resistance might indicate a shift in momentum.
In September, the golden cross occurred when the 50-day SMA crossed above the 200-day SMA. This crossover is generally seen as a bullish signal, but the stock’s current positioning below shorter-term moving averages suggests that traders should be cautious.
Over the past 12 months, Tesla has gained 19.59%, reflecting a positive longer-term trend despite recent volatility. This performance indicates that, while the stock may be struggling in the short term, the longer-term outlook remains relatively strong.
Currently, Tesla is trading at 63.7% of its 52-week range, which shows it is closer to its highs than its lows. This positioning suggests that there may still be room for growth if the stock can regain momentum and break through resistance levels.
TSLA Price Action: Tesla shares were down 3.78% at $395.88 at the time of publication on Monday, according to Benzinga Pro.
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