Electric car maker Tesla Inc (NASDAQ: TSLA)'s latest performance update could have a bearing on three particular ASX shares.
That's according to Stake markets analyst Eliot Hastie, who dissected Tesla's quarterly results released on Thursday morning Australian time.
The car maker's update fell "short of analysts' expectations", he said, blaming "supply chain issues".
"The company revealed a drop in revenue over the quarter, despite a record 343,000 car deliveries.
"Some analysts believe that softening demand is the primary concern, with sales in China – Tesla's biggest market – having slowed due to rising competition and a poor macroeconomic landscape."
Tesla is responsible for just under 20% of all battery-only vehicle sales globally, so it has significant influence as a buyer of lithium producers.
"The brand's earnings could be seen as a negative sign for lithium demand in the short term by some, but the need for this commodity is still predicted to increase exponentially over the long term."
Here are the three ASX shares to watch, according to Hastie.
ASX companies with Tesla supply deals
The most obvious lithium producer to watch this week is Core Lithium Ltd (ASX: CXO).
"Core Lithium… is set to agree on the terms of an offtake agreement with Tesla on October 26," said Hastie.
"While it's not yet clear whether the two parties will have reached terms, the current agreement would see Core Lithium provide Tesla with lithium spodumene concentrate for four years, with production starting in 2023."
The Core Lithium share price has more than doubled year to date, which is a stunning effort in a downward market.
While coverage is sparse, CMC Markets currently lists two analysts who both rate Core Lithium as a strong buy.
Hastie named two other lithium suppliers that could be providing Tesla with the valuable mineral.
"Tesla has also inked a five-year supply agreement with Australia's Liontown Resources Limited (ASX: LTR), which will provide the electric vehicle giant with more than 100,000 tonnes of lithium spodumene concentrate a year from 2024," he said.
"Syrah Resources Ltd (ASX: SYR) confirmed it signed an offtake agreement with Tesla last year."
The Syrah share price has exploded this week, rising 24% since the market opened on Monday.
Liontown is up 2.4% year to date, but has enjoyed a nice 13.4% rally in the past week.
