In April, Shanghai car production fell 75% compared to the previous month — hitting global automakers like Ford, Tesla, Volkswagen and GM.

What’s the big deal? Yesterday, Tesla made its first shipment out of Shanghai since a city-wide COVID lockdown stopped all Tesla car exports in April.

Since April 1, Tesla has fallen 32% alongside a market-wide selloff — and Elon Musk’s $8.4B sale of Tesla shares to fund his Twitter purchase.

• Investors were concerned with Musk — who runs several companies — dividing up his time to fit in Twitter.
• Musk reassured investors that he was staying at Tesla as long as he “can be useful” in an FT interview

Per Barron’s, GM seems to be the preferred U.S. automaker on Wall Street. This week, long-time Tesla believer, Cathie Wood, sold part of her Tesla holdings — while adding GM to her ARK Autonomous Technology & Robotics ETF.

This came despite ARK releasing a report that gave Tesla a $4,600 price target. But in the EV race, Tesla is still leading by a mile.

• GM had only delivered 457 EVs in the first quarter, and Volkswagen had just 2,755 EV sales — compared to Tesla’s 310K shipments.
• But Tesla is also trading at enormous valuations compared to other carmakers — 108x price-to-earnings ratio vs. Ford’s 5x and GM’s 6x.

A better question: Are auto stocks even worth investing in right now?

• Auto demand is still strong with large order backlogs — as car delivery wait times extend into 2023.
• But an extended period of high oil prices and a potential recession could eventually bring demand down.

In the ‘08 financial crisis, GM went through a Chapter 11 bankruptcy, and Ford had nearly died. Today, auto companies are much healthier, but a recession would still hammer their stocks,which might not be priced into stocks yet.