By Akash Sriram

(Reuters) – Chipmaker Wolfspeed forecast current-quarter revenue below estimates on Wednesday as automakers grapple with high inventory levels due to slower-than-expected EV sales growth.

Shares of the company, which counts General Motors and Mercedes-Benz among its customers, fell about 4% in extended trading.

Wolfspeed makes chips out of silicon carbide, a more energy-efficient material than standard silicon for tasks such as transmitting power from an electric car’s batteries to its motors.

EV demand has been growing at a slower-than-expected pace, attributed to high interest rates that lead to chip inventory build-ups at the automakers’ factories.

The company said it expects fourth-quarter revenue between $185 million and $215 million, compared with analysts’ estimate of $225.8 million, according to LSEG data.

“While the industrial and energy end markets pose short-term headwinds to our results, we firmly believe in the strength of our long-term prospects as the electrification of all things continues across a broad set of applications,” CEO Gregg Lowe said in a statement.

Tesla reported a drop in quarterly deliveries in the first quarter of 2024, as it expects “notably slower” growth this year since automakers have pivoted to produce and sell more gasoline-electric hybrid vehicles.

Wolfspeed reported March-quarter revenue of $200.7 million, compared with estimates of $201.1 million, while net loss widened to $1.18 per share from 80 cents per share a year earlier.