It's a woeful start to the week for Aussie lithium shares, and the Core Lithium Ltd (ASX: CXO) share price is no exception.
At the time of writing, shares in the Finniss Lithium project developer are skating 56.9% lower to $1.07. Whereas the S&P/ASX 200 Index (ASX: XJO) is powering 0.79% higher in an attempt to secure its fourth consecutive positive performance.
The sole sector currently holding the benchmark back today is materials. Some of the thorny culprits are lithium heavyweights such as Allkem Ltd (ASX: AKE), Mineral Resources Ltd (ASX: MIN), and IGO Ltd (ASX: IGO).
What's rocking the Core Lithium share price today?
All commodities are driven in either direction by the supply and demand dynamics. When the outlook is rosy for the lithium price (supply low, demand high), it would be assumed the Core Lithium share price would rally.
However, that also means when it's the opposite (supply high, demand low), shares in Core Lithium — and other ASX lithium shares — could come under pressure. Given there is no news out from the company directly, it's fair to assume today's move is probably tied to broader lithium matters.
On Friday, word travelled through the grapevine that the world's leading electric vehicle (EV) manufacturer, Tesla Inc (NASDAQ: TSLA), was taking a knife to its prices in the United States and Europe.
Prominent Tesla investor and commentator Sawyer Merritt shared a summary on Twitter of the price changes for Tesla's various models in the US (see below). The most drastic price cut inflicted was a 23% decrease on the Model Y — Tesla's SUV offering.
The significant price adjustments suggest that EV demand might be less than previously anticipated. Whether it is a byproduct of high-interest rates, a looming recession, or simply an aversion toward EV adoption, all that matters for lithium producers is that less lithium might be needed than first thought — at least in the short term…
What else?
It is a battle between short-sellers and investors when it comes to the Core Lithium share price today.
According to the latest short data, Core Lithium was the sixth most-shorted ASX share as of last week, with an 8.8% short interest. Today, that short pressure is being felt all the more in light of a potentially weaker outlook for lithium demand.
Goldman Sachs currently has a 95 cents per share price target on Core Lithium. Even after factoring in today's selloff, Goldman's target would suggest a further 11% downside from here.
