Shares in Tesla (Nasdaq: TSLA) slipped as low as 3% Monday after its billionaire chief executive officer took Twitter to announce the cancellation of the expensive version of its Model S Plaid.
There are two versions of the Model S that are advertised as vehicles that travel long distances: The Plaid and Plaid+, which were both first announced by Tesla in January.
The Model S Plaid+ gets 500 miles of range on a single charge compared with the standard Plaid’s 390 miles. Both models can accelerate from 0-60 mph in just under two seconds.
The Model S Plaid delivery event is slated to take place on Thursday at the Fremont Factory.
Meanwhile, the Plaid+ version is getting canceled because it’s apparently “just so good,” according to Elon Musk.
Or, counterpoint: It’s too expensive. The MSRP of the Plaid+ was set to be about $30,000 more than the Plaid.
In addition, Tesla has delayed its newest version of its Model X, as the global chip shortage continues to play a toll on the entire auto industry.
"This is not the news that Wall Street wanted to hear," Wedbush analyst Daniel Ives said, as cited by CNN Business.
"At the surface the excuse makes sense, but it also feels like 'The dog ate the homework.'"
Despite the headwinds, Ives is keeping a bullish stance on Tesla, repeating his "outperform" rating, with a price target of $1,000. He sees "transformational consumer demand" in China and expects Tesla to benefit from that. Ives also sees Tesla’s Chinese electric vehicle rivals Nio (NYSE: NIO), XPeng (NYSE: XPEV), as well as Li Auto (Nasdaq: LI) to benefit as well.
"With China a linchpin to Tesla's global success and its Giga footprint a key advantage, the latest back and forth between Beijing and Tesla have clearly negatively impacted demand for Tesla in China for now," Ives said, as cited by Business Insider today.
"Now its about Musk playing nice in the sandbox and making sure that Tesla does not see any further stumbles in China which is poised to represent 40%+ of global deliveries by 2022."
Ives’ price target on Tesla represents 65% upside from its Wednesday closing price.