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What happened
Actions of You’re here (NASDAQ: TSLA) were crushed Thursday. The stock fell more than 8% as the market closed.
Growth stock was likely down both due to a sell-off in the market as a whole and news that the automaker’s Model 3 production line in Fremont, Calif., Could have been temporarily interrupted.
Image source: Getty Images.
So what
The Tesla California plant’s Model 3 production line is shut down between February 22 and March 7, according to a Bloomberg report on Thursday. The economic news website said its source was “someone familiar with the subject.” Bloomberg speculates that the problem could be related to the supply chain, as severe snowstorms affect ground transportation.
Tesla shares were also likely negatively affected on Thursday by a market-wide selloff. The S&P 500 Index and Nasdaq composite ended the day down 2.5% and 3.5%, respectively.
Now what
A production hiatus for Tesla’s Model 3 could have a significant impact on the company’s sales. Not only is the Model 3 one of the company’s best-selling vehicles (alongside the similarly priced Model Y), the company produces more Model 3 and Y vehicles at its California plant than anywhere else in the world.
Fortunately, however, Tesla is no longer as dependent on its California factory as it once was. At the end of 2019, Tesla began production of Model 3 vehicles at a factory in Shanghai. The automaker added production of the Model Y to the plant last year.
This article represents the opinion of the writer, who may disagree with the “official” recommendation position of a premium Motley Fool consulting service. We are colorful! Challenging an investment thesis – even one of our own – helps all of us to think critically about investing and make decisions that help us become smarter, happier, and richer.
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