Tesla (TSLA) Plunges 3.47% Amid Supply Chain Woes, Recall Fears

On April 16, 2025, Tesla's stock experienced a 3.47% drop in pre-market trading, reflecting the market's response to a series of challenges facing the company.

Tesla is grappling with significant supply chain disruptions due to escalating trade tensions between the U.S. and China. The company has temporarily halted the shipment of key components for its Cybercab and Semi electric trucks from China to the U.S. This decision comes as the Trump administration has increased tariffs on Chinese goods, making it financially unsustainable for Tesla to continue its original plans. The delay in production is expected to impact the company's ability to meet its 2026 production targets for these vehicles.

In addition to supply chain issues, Tesla is facing a potential massive recall of approximately 400,000 vehicles equipped with the HW3 "autopilot" computer. The company had previously claimed that these vehicles were equipped with all the necessary hardware for full self-driving capabilities, a promise that has not been fulfilled. This hardware controversy could result in significant financial and reputational damage for Tesla, as it may need to replace the HW3 computers or compensate affected customers.

Tesla's CEO, Elon Musk, has also been under scrutiny for his political involvement, which has led to a decline in brand trust. Musk's alignment with the Trump administration has alienated some consumers, particularly those with progressive views. This political entanglement has further exacerbated Tesla's challenges, as it struggles to maintain its market position amidst increasing competition and economic uncertainty.