Electric vehicle (EV) maker, Tesla (TSLA) is under pressure again with the NTSB (National Transportation Safety Board) opening a probe into a Tesla electric Semi truck’s crash and fire incident on August 19. The Semi, driving on the Interstate-80 highway near the Nevada-California border, steered off the road and ran into a bunch of trees, catching fire. Although no one was harmed, the fire went on for hours, forcing the California Highway Patrol to close the freeway on both sides for 16 hours. This event lays another burden on Elon Musk’s EV company.
In the incident, the Semi’s lithium-ion battery pack is said to have caught fire. Reports suggest that it is difficult to extinguish fires from such batteries and undoubtedly, the California fire crew spent hours to contain it. Furthermore, the fumes from such battery pack fires are considered hazardous to people’s health. The NTSB, along with the California Highway Patrol authority, is probing the cause of the crash, which might have been due to the driver falling asleep while driving.
Tesla’s Growing Challenges
Tesla is being tasked with multiple challenges including stiff competition, inflationary pressures, and overall dwarfing demand for EVs. Just yesterday, Tesla recalled 9,100 Model X SUVs in the U.S. due to a problem with a roof trim that could detach and lead to road hazards and crashes.
Moreover, Republican Presidential candidate Donald Trump recently revealed his intent to abolish the $7,500 tax credit on EVs. This could further dampen the demand for EVs.
Furthermore, Tesla recently announced its shift to costlier Cybertrucks and stopped taking orders for the cheaper base model. This shift also pronounces the lagging demand for Musk’s ambitious Cybertrucks as they were launched with lower-than-expected mile range.
Hedge Funds Offload TSLA Stock
Amid the current headwinds, hedge funds are offloading TSLA stock. According to TipRanks’ Hedge Fund Trading Activity tool, TSLA has a Very Negative Hedge Fund Confidence Signal, as hedge funds decreased their holdings of TSLA shares by 677,500 in the last quarter.
Is Tesla a Buy, Sell, or Hold?
Owing to the different challenges facing Tesla’s performance, Wall Street prefers to remain on the sidelines. On TipRanks, TSLA has a Hold consensus rating based on ten Buys, 14 Holds, and seven Sell ratings. The average Tesla price target of $211.46 implies 5.3% downside potential from current levels, while shares have lost 10.2% so far this year.
