Tesla fell 6% in trading on Wednesday, closing at $US193 a share.
The stock dipped as low as $US188 before recovering.
The drop was signaled Tuesday when CEO Elon Musk told a group of journalists at the Detroit Auto Show that Tesla sales in China were disappointing in the fourth quarter and that the company would not achieve profitability until 2020.
Tesla is down significantly from a peak trading price of $US291, achieved in September.
The stock swooned last year, but it bounced back when Musk revealed the all-wheel-drive “D” version of the company’s Model S electric car.
Analysts and observers are closely following Tesla’s ability to deliver on its sales targets. With the stock up over 1,000% from its 2010 IPO, a huge amount of future growth is priced into shares.
Tesla hasn’t exactly struggled to build and deliver the Model S, but the company is unlikely to meet its goals for 2014. If Tesla does fall short, it won’t be by much, however. The main issue is a disconnect between the cars Tesla takes deposits on and the cars it delivers, when it can officially book a sale.
We’ll have a better sense next month when Tesla reports 2014 fourth-quarter earnings.
Musk chalked up the weakness in China to misunderstandings in the Chinese market about Tesla’s charging infrastructure. He said those misperceptions — that the Model S lacked the infrastructure to enable adequate range — have been cleared up.
Tesla has two more models slated for 2015 and 2017. First will come the Model X SUV. Musk said Tesla had sold out its 2015 production, which means that the company has taken deposits for all the Model X units it can build during the year (the company is operating only one production line).
The important mass-market Model 3 is scheduled for 2017.
Musk predicted Tesla would be selling millions of cars by 2025.
For context, Musk hasn’t historically held back on dispensing bad news about Tesla. Last year, he sent the stock into a dive when he said shares were overvalued.
In after-hours trading, Tesla shares were up very slightly.
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