What happened
Actions of Tesla (NASDAQ: TSLA) were crushed on Thursday. The shares fell more than 8% when the market closed.
The growth stock probably fell due to strong sales in the general market and news that the automaker’s Model 3 production line in Fremont, California, may have been temporarily halted.
Image source: Getty Images.
And
The Model 3 production line at Tesla’s California plant was closed between February 22 and March 7, according to a report by Bloomberg on Thursday. The business news website said its source was “a person familiar with the matter”. Bloomberg speculates that the problem may be related to the supply chain, as there are heavy snowstorms affecting land transport.
Tesla’s shares were also likely to be negatively impacted on Thursday by a general market settlement. THE S&P 500 Index and Nasdaq Compound ended the day with a fall of 2.5% and 3.5%, respectively.
What now
A break in production of Tesla’s Model 3 could have a significant impact on the company’s sales. The Model 3 is not only one of the company’s best-selling vehicles (alongside the similarly priced Model Y), but the company produces more Model 3 and Y vehicles at its plant in California than anywhere else in the world.
Fortunately, however, Tesla is not as dependent on its California plant as it was in the past. In late 2019, Tesla started production of Model 3 vehicles at a factory in Shanghai. The automaker added production of the Model Y to the factory last year.
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