Tesla Slips as China Turns Factory Surplus Into a Global Threat

This article first appeared on GuruFocus.

China’s enormous vehicle surplus intensified the pressure on Tesla Thursday. Tesla (NASDAQ:TSLA), the electric-vehicle, energy-storage and artificial-intelligence company, fell approximately 0.6% to $365.46. China can build nearly twice as many vehicles as its domestic market absorbs, leaving manufacturers to push excess supply into overseas markets.

The competitive battlefield is only getting bigger. A Sinopec researcher forecast that electric vehicles could capture 75%80% of Chinese auto sales by 2030, versus 65% in July. Tesla delivered 480,126 vehicles worldwide in the second quarter, including 467,762 Model 3 and Model Y vehicles, but relentless Chinese output threatens pricing power far beyond China.

That squeeze matters because Tesla’s automobiles still fund its expensive autonomy and robotics ambitions. Automotive gross margin was 16.3% in the second quarter, while capital expenditures hit $5.8 billion and free cash flow was negative by roughly $1.1 billion. The image sharpens the valuation warning: Tesla’s $365.46 share price stands 9.51% above its $333.73 GF Value, leaving investors to decide how much future AI success is already priced in.