Sub-Zero Oil Price is a Scorching Car-Wreck Problem for Tesla Stock

  • Tesla stock poised to slip for a third straight day this week as the energy prices continue to tumble.
  • Negative oil is a big problem for Tesla, according to recent survey data.
  • TSLA stock’s $130 billion valuation looks exceptionally high as consumers tighten their belts around the world.

Tesla (NASDAQ: TSLA) stock has come under severe pressure over the last few trading days. Underneath the hood, there is a big problem brewing for Elon Musk’s EV company, and it all centers around the collapse of oil prices around the world.

Tesla Stock Starts To Slip As Oil Prices Crash

No-one on the planet makes a sexier electric vehicle than Tesla. It’s also true that no other manufacturer stuffs their cars with so many futuristic gadgets and gizmos while simultaneously being more environmentally conscious.

This is why so many people have fallen in love with the concept of an electric car and made the leap from gasoline in the last 12 years.

Unfortunately, all the evidence suggests this isn’t true, and that’s going to be a problem for Tesla’s stock price.

While Ford, General Motors, and other makers of predominantly gasoline-powered cars have been decimated by the coronavirus, Tesla has managed to recover a huge chunk of its losses from March.

Tesla (NASDAQ: TSLA) stock has slipped as the oil price suffered a historic crash this week. Source- Yahoo Finance

However, as the oil price went negative this week, followed by $7 WTI  in the June contract as well, Tesla stock has been on the slide.

Fuel Cost Not Ideology Is The Main Driver Of Demand For EVs

To explain why these two assets are correlated, Mark Wakefield, global co-head of the automotive and industrial practice at AlixPartners, a global consulting firm that advised on the Chapter 11 reorganization of General Motors, provided the following insight to,

Lower oil prices are almost certainly going to dampen electric-vehicle sales, and therefore hurt EV-heavy companies. In our most recent consumer…

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