By Dhirendra Tripathi
Investing.com – Tesla (NASDAQ:) was down 7% in Tuesday’s premarket following reports that the electric vehicle maker has halted plans to expand its capacity in China, its largest market outside the U.S.
Along with the stock, ARK Innovation ETF (NYSE:), part of Tesla cheerleader Cathie Wood’s ARK Investment group, was down too. Tesla is the ETF’s largest holding with a 10.88% weight.
A Reuters report said Tesla has halted plans to buy land to expand its Shanghai plant and make it a global export hub. Tesla had earlier considered expanding exports of its China-made entry-level Model 3 to more markets, including the U.S.
Trade tensions between the two countries, showing little sign of abating even under the Biden administration, have put paid to Tesla’s ambitions. Cars imported from China in the U.S. carry a 25% tariff besides other duties.
The company had planned to use the expanded output to ship cars to the U.S. It currently uses the existing capacity in China to export to Europe.
Last few months have not been smooth for Tesla in the world’s largest market for EVs. There was a deadly crash involving a Tesla vehicle in China. The state media has carried articles panning the company over what it claims are faulty brakes.
The company was last month forced to issue an apology following an incident that showed a woman climbing atop a vehicle at the Shanghai Auto Show to protest against what she claimed were malfunctioning brakes in a Tesla she owned.
There was some brighter news the company, however, in that a regulatory investigation into a fatal crash in Texas in April involving a Tesla car suggested that the so-called ‘autopilot’ software was not engaged at the time of the incident.
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