What happened

Shares of Tesla (TSLA -1.38%) -- the world's biggest electric vehicle (EV) company -- fell for a seventh straight trading day on Tuesday as markets reopened. Through 10:40 a.m. ET, shares of the EV kingpin tumbled 6.8% from Friday's close, marking Tesla's 15th down day this month.

So what

On Dec. 26, Reuters and The Wall Street Journal reported that Tesla will suspend for an eighth day its production at its Shanghai electric car plant, the largest in the world. Furthermore, Tesla told its employees it will not restart production in Shanghai until Jan. 2.  

Soon after this report came out, China's Global Times reported a sort of non-denial denial from Tesla, calling reports of the suspension "inaccurate," while at the same time confirming them by saying the Shanghai plant is indeed conducting "annual maintenance work."  

So what's really going on in China? Well, the economy is reopening as the government rolls back its zero-COVID policy for one thing. That's apparently snarling supply chains again, however -- and not just for Tesla. As CNBC reports today, Nio stock is also down today on reports that a breakout of COVID-19 is disrupting supplies of EV parts in China.  

It makes sense that that might cause supply chain problems for Tesla as well.

Now what

The good news is that Tesla reportedly has "sufficient inventory" to fulfill orders, according to the Journal. The bad news is that this would appear to imply that demand for Tesla cars in China is falling in line with production, with the Journal also observing that car demand in China has been weak since October 2022. Moreover, Tesla recently doubled the size of its sales incentives in the U.S., which would suggest that falling demand for the company's cars isn't just a problem in China.

If, however, you agree that supply chains in China will eventually right themselves and that Tesla's sales will revive, then the continuing sell-off in Tesla shares may present a buying opportunity. At $115 and change, Tesla stock now trades at its lowest price in two and a half years. At less than 32.5 times trailing earnings, and long-term earnings growth rates projected at 35%, Tesla stock sports a price/earnings-to-growth (PEG) ratio of just 0.9 -- noticeably below the value investor's touchstone of a PEG of 1.

If you're brave enough to try to grasp a falling knife -- that's still falling -- now could be a great time to buy Tesla stock.