Tesla drops 11% after Musk warned supply chain constraints, hitting other EV makers

• Investors were disappointed with the delays in launching Cybertruck and Semi-truck

• JP Morgan, Goldman Sachs, and Wedbush raised their price targets after Tesla’s earnings

Shares of Tesla Inc (NASDAQ: TSLA) plummeted on Thursday, dragging down rival electric carmakers after CEO Elon Musk said the company would delay releasing new vehicles until next year due to supply chain disruptions that could last through 2022.

Tesla sharply dropped over 11.5% to $829.10 in New York, down 30% from its record high in November.

After reporting strong quarterly earnings beating analysts’ estimates, Musk, in a conference call, said that Tesla would focus on ramping up the volume of Tesla Model X, Y, S, and 3 in 2022 by more than 50% rather than launching new ones.

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The decision to delay the launch of new models like Cybertruck, Semi-truck, and Roadster is not to dent volume growth in the face of supply chain headwinds, he said.

EV shares bloodbath

The warning bodes ill for other electric carmakers, which have promised to launch new vehicles in the coming months.

Shares of other EV makers also dropped, outpacing Nasdaq’s slide.

Electric pickup truck maker Rivian Automotive Inc (NASDAQ: RIVN) dipped over 10.5%, Lucid Group Inc (NASDAQ: LCID) dropped more than 14%, Lordstown Motors Corp (NASDAQ: RIDE) lost around 8.5%, and Nikola Corp (NASDAQ: NKLA) fell almost 9%.

“Tesla is even having trouble. Other EV firms are not going to be able to produce these vehicles as fast as they want,” Curzio Research CEO Frank Curzio told Reuters, adding that the volume growth of many new models could be pushed into 2023.

Growth expectation

Even as Musk said, Tesla was not working on a model that would sell for $25,000, around half the price of its cheapest Tesla 3 model, analysts have said the company needed such a car to hit its volume targets.

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At least six investment firms, including JP Morgan, Goldman Sachs, and Wedbush, raised their price targets after Tesla’s report, indicating solid growth expectations while looking beyond supply chain issues.

The median analyst price target is now $1,087, more than 31% above Tesla’s Thursday close.

Picture Credit: Teslarati