The Tesla Inc. news that may make investors worry

WAN CHAI, Hong Kong - Oct. 13, 2022 - PRLog -- The stock of Tesla Inc. (TSLA) has started the week on a down note. At 12:10 p.m. ET, the stock had recovered from its sessions low but was still down 1.8%. The dip comes as the market continues its slump, which began last Friday with a 1,000-plus point plunge in the Dow Jones Industrial Average (^DJI). However, there was some news this morning that may make investors worry if TSLA's valuation is too high.

Investors have built a lot of growth into TSLA stock, which has a market worth of about $900 billion and a trailing-12-month price-to-earnings (P/E) ratio of 90. According to The Wall Street Journal, Honda Motor Co., Ltd. (HMC) and South Korea-based LG Electronics Inc. (066570.KS) intend to establish a new $4.4 billion electric vehicle (EV) battery facility in the United States, which may have investors recognizing that increasing competition for TSLA isn't far away.

The new facility will supposedly be located in Marysville, Ohio, where HMC already has a manufacturing plant. Having batteries made in the United States will allow the manufacturer and its vehicles to qualify for incentives under the newly enacted Inflation Reduction Act (IRA).

As a consequence of its production facilities in the United States, including a joint battery production plant in Nevada with Panasonic Holdings Corporation (6752.T), TSLA has emerged as one of the major benefactors of the new law. Some of TSLA's vehicles will requalify for tax breaks under the IRA that had previously expired owing to exceeding production volume constraints.

This revelation adds to a growing list of the automaker's promises of manufacturing batteries in the United States. Investors are aware that the EV industry appears to be rapidly expanding, with potential for TSLA and others. However, value remains important and investors may want TSLA's company to catch up to its stock price while pushing shares higher.

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