Tesla (TSLA) is ditching plans for a Plaid Plus version of Tesla’s Model S, according to a tweet late Sunday by CEO Elon Musk. Tesla stock reversed higher for a slim gain.
The car was expected to go on sale in about a year and cost nearly $150,000. Tesla still plans to produce a Plaid version of the car that is around $30,000 cheaper. The company is holding a Model S Plaid delivery event on June 10, after a monthslong delay in Model S deliveries amid an extended makeover.
Tesla CEO Musk tweeted that Plaid was being canceled because there was “no need, as Plaid is just so good.”
“This is not the news the Street wanted to hear,” said Wedbush analyst Daniel Ives in an email to IBD. “At the surface the excuse makes sense, but it also feels like the dog ate the homework.”
If battery issues are to blame for not producing the Model S Plaid Plus, plans for Tesla’s Cybertruck and Semi don’t look promising. Musk also has said the same 4680 cells would be used in some Model Y crossovers.
Musk had boasted about the Plaid being able to go more than 500 miles on a single charge, compared to the standard Plaid version, which will be designed to go 390 miles.
That extended range would have given it bragging rights over the high-end Lucid Air, made by Lucid Motors, with a top variant range of 517 miles.
Lucid Motors is led by former Tesla chief engineer Peter Rawlinson. The startup is supposed to deliver its first EV, the luxury Lucid Air sedan, later this year. The initial Dream Edition will cost $169,000 and drive 503 miles on one charge.
On Feb. 23, special purpose acquisition company (SPAC) Churchill Capital Corp IV (CCIV) announced it was taking Lucid public in a deal that values Lucid at $24 billion. Lucid will trade under the symbol LCID. The deal is expected to close at the end of the second quarter.
Shares rose 1% to 604.13 on the stock market today, recovering from an intraday low of 582.88 to close pennies below its 200-day moving average. MarketSmith chart analysis shows Tesla stock fell below its 200-day line last week. Shares are about 35% below their all-time high of 900.40, notched on Jan. 25.
Meanwhile, CCIV stock jumped nearly 11%.
Tesla’s ‘Choppy Few Months’
The global chip shortage has forced Tesla to make some tough choices on the production front, Ives said.
“The last few months have been choppy for Tesla, and this adds to the overall agita,” he said.
Tesla orders fell by nearly 50% in May vs. April, the Information reported last week, citing internal data. That comes amid several weeks of consumer complaints about Tesla’s safety and perceived arrogance, heavily covered in China’s state media. In April, Tesla deliveries in China excluding exports fell by two thirds vs. March to 11,671, according to data from a trade group.
“Musk & Co. have clearly hit a rough patch in the region with autopilot safety concerns, chip shortages, negative PR issues, and a clamping down by Beijing around the Tesla story all contributing to this softer demand period,” Ives wrote in a note to clients.
Early Tuesday, investors should get China EV sales for May, including the first reading on Tesla sales in that critical market. Those Tesla sales likely reflect orders from prior months.
Tesla has also removed radar sensors and some lumbar support features from Model 3 and Model Y cars in the U.S., likely due to semiconductor supply issues.
Follow Adelia Cellini Linecker on Twitter @IBD_Adelia.
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