(Bloomberg) — Tesla Inc.’s decision to drop a longer-range version of its high-performance Model S sedan squashed investors’ hopes for a relief rally on Monday after declining six out of the last seven weeks.
The electric-car maker’s shares fell as much as 2.7% in New York trading, extending the decline from their peak in late January to 34%, after Elon Musk tweeted that the Model S Plaid sedan was canceled. The chief executive officer said there’s “no need” to offer the car because the shorter-range Plaid version “is just so good.”
“This is not the news the Street wanted to hear,” Wedbush Securities analyst Daniel Ives said. “At the surface, the excuse makes sense, but it also feels like ‘the dog ate the homework.’”
Tesla listed the Plaid on its website as offering more than 520 miles (837 kilometers) of range, compared with about 390 for the regular Plaid model, and had been taking refundable deposits for the car for months.
Ives said Plaid was expected to draw niche demand and that the global chip shortage has forced the company to make some tough choices with regard to production.
One other factor could be the availability of new kinds of batteries Tesla is developing. The carmaker shared plans in September to build larger, energy-denser and more powerful 4680 cells that would enable the company to offer both cheaper and higher-performing EVs. In April, however, Musk said those cells were probably 12 to 18 months away from volume production.
The decision to cancel Plaid , announced just days before a Plaid delivery event on June 10, is only the latest in a run of negative news that has battered Tesla shares in recent months, including reports that point toward a slowdown in China sales, multiple crashes, several recalls and the ongoing semiconductor shortage weighing on all automakers.
Tesla shares are now down about 16% this year compared with the 12% advance for the S&P 500 Index.
(Updates with analyst’s comment in the third paragraph.)
More stories like this are available on bloomberg.com
Subscribe now to stay ahead with the most trusted business news source.
©2021 Bloomberg L.P.