Despite a larger market gain, Tesla (TSLA) shares fell 4.8% on Monday, going below $200 and reaching its lowest level since late May. The drop was caused by two major factors:

1. Tesla's battery supplier, Panasonic, cut vehicle battery output in Japan during the third quarter, decreasing its annual profit prediction by 15%. This was attributable to a worldwide slowdown in EV sales. Panasonic provides battery cells to Tesla's Nevada Gigafactory in the United States. However, the Japanese manufacturing drop had an impact on customers worldwide, not only in North America.

2. ON Semiconductor revealed lower-than-expected profit and revenue guidance due to decreasing sales. ON Semiconductor manufactures silicon carbide chips used by Tesla in its EV powertrain and other important components. A decline in demand for these chips is viewed as a possible indicator of slowing EV sales, notably for Tesla.

Tesla investor Gary Black said that the stock's downturn could be attributed to ON Semiconductor's -18% projection failure. This was owing to concerns about the increasing danger to vehicle demand caused by rising interest rates.

Tesla shares have dropped roughly 22% in the last month, but are still up 60% year to date.