What happened
Yesterday, shares of electric car leader Tesla (TSLA 12.06%) took a 2.4% tumble as U.S. media obsessed over Elon Musk's emailed ultimatum: Tesla office workers must cease working from home and report to the office, or else find a new job and "pretend to work somewhere else."
Today, though, Tesla's stock took a turn for the better, rising 4.7%, as investors reacted positively to news that the company is delaying delivery of longer-range electric vehicles in the U.S. Why is that?
Image source: Getty Images.
So what
Reuters is reporting that because of snarls in the automotive parts supply chain, Tesla has been forced to delay deliveries of certain long-range models of its electric vehicles in the U.S. This sounds like bad news for Tesla -- not what you'd expect to send the stock shooting up. According to the news agency, new orders of long-range versions of Tesla's Model Y electric crossover will not arrive before December, and maybe not until March 2023. Orders for long-range Model X electric SUVs, placed today, won't arrive before February 2023 (and perhaps as late as May).
Only with the Model 3 do things look a bit better. Long-range versions of the Tesla electric sedan, ordered today, will at least arrive before the end of this year -- sometime between September and December.
Now what
What does this mean for Tesla and its investors? I see two possibilities -- not mutually exclusive.
First and foremost, delays mean unhappy customers, and customers unhappy with being asked to wait for a new Tesla might decide to buy an electric car from Volkswagen, from General Motors, or from Kia or Hyundai instead. If that's the case, then this supply-chain problem could cost Tesla revenue and further threaten its goal of delivering 1.5 million EVs this year.
On the plus side, though, consider: In recent years, "long range" has become kind of the default, and the low-price option for most Tesla EVs -- while premium-fare models with higher price tags are dubbed "performance" or even "plaid." In delaying deliveries of "long-range" models, therefore, Tesla seems to be favoring production and sale and delivery of its highest-priced and highest-margin products -- a pattern we've seen in the past as well at Tesla.
This means that, even if sales and delivery numbers take a hit, Tesla appears to be doing all it can to preserve its profits until the supply-chain problems work themselves out and it can shift back into volume production mode.
For Tesla investors, I think that's probably a good thing -- and a reason for Tesla stock to go up, not down.
