What happened
It looks like Friday is going to end the week on another down note for Tesla (TSLA +0.22%). As of 12:10 p.m. ET, Tesla stock is down 4.2% -- a much steeper fall than the Nasdaq's overall 1.1% decline.
But what is it, exactly, that is ailing Tesla today?
Image source: Getty Images.
So what
Take your pick. I see two big headlines that could be weighing on the electric car pioneer's stock today.
In the first headline, Reuters is reporting on continued troubles with Tesla's effort to ramp up production of its own batteries. Citing analysts who follow the company, Reuters reports that Tesla "will probably fall short of the ramp-up of 4680 over the next year" -- eventually succeeding with the project over the longer term, but "starting off slowly."
As the news agency explains: "Tesla sources battery cells from suppliers like Panasonic Corp, CATL and LG Energy Solution. [But in] late 2020, Musk announced that Tesla aims to halve the costs of the most expensive part of an EV by producing its own batteries" -- newfangled 4680 lithium ion batteries, that can hold five times the power of Tesla's current 2170 batteries, to be precise. Problem is, while Elon Musk has told investors that he expected to produce enough of the new batteries to power 1.4 million Teslas this year, analysts are saying the actual number will probably be closer to 30,000.
Now what
That's the first headline impacting Tesla today. Now here's the second: In that same Reuters piece, the news agency noted that one factor hindering Tesla's ability to produce 4680 batteries at scale is the rising cost of raw materials such as nickel. Other analysts have suggested that such rising raw material costs could add $1,000 to the cost of building an electric car.
Thus, it seems quite a coincidence that today Reuters also reported that Tesla has is raising the sticker price of its Model Y electric crossovers, and its Model 3 long-range sedans by, wait for it, $1,000.
From one perspective, this can be seen as good news -- Tesla is passing on the cost of pricier raw materials to its customers, and keeping its profit margins intact. From another perspective, though, Tesla's price move seems to confirm that the company is suffering from input cost inflation. And if input costs rise faster than Tesla's ability to pass them along to consumers without affecting sales growth, that could eventually pinch profits at Tesla.
