Tesla has experienced two consecutive days of sharp declines, and a prominent analyst from Morgan Stanley has issued a warning: the entire electric vehicle industry should be on alert.

The pessimistic attitude of Tesla towards its future profitability and demand prospects is sounding the alarm for the entire industry.

On October 20th, Adam Jonas, a long-time Tesla bull and analyst at Morgan Stanley, expressed in a report titled "Tesla Q3: A Turning Point for the Electric Vehicle Industry?" that Tesla's Q3 earnings report indicates a pessimistic outlook for future profitability and demand prospects, which may signal that the entire electric vehicle industry is about to face difficulties.

Jonas believes that Tesla's concerns about demand prospects should serve as a warning to investors - the global electric vehicle industry may be entering a period of weak demand:

"We see the warning signs from the 'gold standard' of electric vehicles, which will have a ripple effect on the entire industry."

Tesla's Q3 earnings report showed that widespread price cuts significantly reduced Tesla's gross margin, with a Q3 gross margin of 17.9%, lower than the first half of the year's 18.7%. However, Musk stated that with the continued increase in loan interest rates, Tesla needs to continue to lower prices, which means that Tesla may further compress its profit margins.

At the same time, Musk stated that the company will continue to reduce production costs to improve profitability. "Delaying the construction of the expensive Mexican factory may be a wise choice." Jonas pointed out that Tesla's cautious stance on slowing production is bad news for the entire electric vehicle industry, as Tesla is the leading global electric vehicle company.

The disappointing Q3 earnings report and Musk's frustrated demeanor have caused Tesla's stock price to fall for three consecutive days, with overnight U.S. stocks falling more than 3%, hitting a low since June 1st at $211.99, with a cumulative decline of over 15% this week.

Jonas pointed out that General Motors, Ford, and Stellantis NV are currently facing worker strikes, and unions are negotiating significant wage increases. If Tesla's operating profit margin is difficult to reach 5%, "the prospects for the above-mentioned three automakers, who need to significantly increase worker wages, will be even more pessimistic":

"Data shows that both startups and traditional automakers are still far behind Tesla in the electric vehicle race. And now traditional automakers are facing more troubles."

Is weak demand the industry trend?

Under the wave of global automotive electrification, many automakers have invested billions of dollars this year to build factories and battery plants. However, the current sales performance of electric vehicles in the United States clearly does not reflect a strong demand trend. Research firm Motor Intelligence's latest data shows that the growth rate of electric vehicle sales in the United States in the first half of the year has dropped from 71% in the same period last year to 50%, still lagging behind the 65% growth rate for the entire year of 2022.

Data from industry service company Cox Automotive also shows that the inventory of electric vehicles at US dealerships has reached a historic high. As of the end of June, the number of electric vehicles in dealerships or en route to stores was about 90,000, four times higher than the same period last year.

The electric vehicle giants have all chosen to slow down production. General Motors announced on Tuesday that it will delay the production of a flagship model at a factory in Michigan by one year, citing a slowdown in demand for electric vehicles.

Ford announced last week that it will temporarily slow down the production capacity of the electric F-150 Lightning pickup truck. Data shows that sales of Ford's iconic F-150 Lightning electric pickup truck in the third quarter plummeted by 46% compared to the same period last year, with only 3,503 electric pickups sold. In July, Ford slowed down the expansion of electric vehicles and shifted its focus to commercial vehicles and hybrid vehicles.

Luxury electric vehicle manufacturer Lucid released a report on Tuesday stating that despite price reductions and promotions, production in the third quarter has dropped by nearly 30%, with only a slight increase in deliveries, raising concerns about the demand for luxury electric vehicles in the market.