Elon Musk, CEO of Tesla Inc, believes a recession will continue until the spring of 2024, he tweeted on Friday, after initially saying this week that “a sort of recession” in China and Europe was weighing on demand for its electric vehicles.

“Just guessing, but probably until spring of ’24,” Musk said on Twitter after a user asked him how long the recession would last. It was not clear if Musk was talking about a global recession or expanding on the comment on China and Europe he made on Wednesday.

Tesla Inc shares fell 6.6 per cent to $207.28 on Thursday, a day after Musk told analysts on a conference call that weakness in China and Europe was making demand “a little harder than it would otherwise be.”

At least six brokerages reduced their price targets on the stock, with Tesla bull Wedbush Securities slashing its price target by $60 to $300. Tesla’s third-quarter revenue fell short of analysts’ expectations on Wednesday.

While Musk told analysts that Tesla has “excellent demand” for the current quarter, the electric vehicle manufacturer said it will miss its annual delivery target due to limited transportation capacity.

Tesla announced earlier this month that it delivered a record 343,830 EVs in the most recent quarter. Not only did that fall short of analysts’ expectations of 359,162, but it also fell short of Tesla’s production of 365,923, a rare occurrence for the automaker, whose deliveries have been higher or comparable to production in many recent quarters.

During a July conference call, Musk stated that macroeconomic uncertainty could have an impact on demand for its electric vehicles, but when pressed for details by an analyst, he stated that the company did not have a demand problem, but rather a production problem.

According to a June email obtained by Reuters, Musk stated that he had a “super bad feeling” about the economy and that Tesla needed to cut about 10 per cent of its workforce. Later, he stated that the reduction would only apply to salaried employees.

Tesla stock has lost more than a third of its value this year. They fell as much as 9% on Thursday, reaching a 16-month low.

“The results will likely add to debates about demand destruction that ensued after 3Q deliveries tracked -5% below company-compiled consensus,” JP Morgan said in a report.

Tesla fell short of its automotive gross margin expectations on Wednesday, owing to the costs of ramping up production at its new factories in Berlin and Austin.

“The bullish narrative is clearly hitting a rough patch as Tesla must now prove again to the Street that the robust growth story is running into a myriad of logistics issues as opposed to demand softening,” Wedbush analyst Daniel Ives said.

(Adapted from EconomicTimes.com)

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