The plunge in the shares of Tesla Inc (NASDAQ: TSLA) has extended to the fortunes of Chinese EV honchos who saw $10 billion eroded from their wealth, Bloomberg reported Tuesday.
What Happened: Notable among those who have seen a fall in wealth include Xpeng Inc (NYSE: XPEV) CEO He Xiaopeng. His wealth has fallen 858 million since the beginning of January, according to the Bloomberg Billionaires Index.
Xpeng stock has fallen nearly 37% since its highs in late January. Other Chinese EV stocks that have taken a hit include Nio Inc (NYSE: NIO), which is down 27% from its early January highs, and Li Auto Inc (NASDAQ: LI), which has plummeted 28% since Jan. 20.
The Elon Musk-led Tesla has nosedived 20% from its all-time high of $900.40, which it reached on Jan. 25.
“EV stocks have priced in big growth over a long timeframe, leaving them particularly vulnerable to shifts in sentiment,” said Robert Cowell, analyst at 86Research, a Shanghai-based private equity firm, according to Bloomberg.
Cowell also pointed to competition as a factor and said that there “can only be a few market leaders in the long term.”
Why It Matters: Tesla shares have been falling due to Tesla’s exposure to Bitcoin (CRYPTO: BTC) and demand concerns, according to Wedbush analyst Daniel Ives.
See Also: Cathie Wood Terms Tesla Dip ‘Very Healthy,’ Piles On 240,548 Shares For Ark
A variety of factors can be construed to be responsible for the decline in the stock prices of Chinese EV makers ranging from broader market decline to caution ahead of earnings releases.
EV fatigue from special purpose acquisition companies and increased competition were cited as reasons for the plummet by Deutsche Bank Securities analyst Edison Yu.
Traditional automakers such as Volkswagen AG (OTC: VWAGY), Hyundai Motor Company (OTC: HYMTF), and Ford Motor Company (NYSE: F) are in the process of launching more affordable EVs, according to Reuters.
Price Action: On Tuesday, Tesla shares closed 2.19% lower at $698.84, Xpev shares closed 0.24% lower at $37.91, Li Auto shares ended the day 3.05% lower at $26.99 and Nio 3.10% down 3.1% at $49.11.
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