Tesla stock takes a dip as investors bite nails over company’s future

Tesla’s stock vacillated Monday during the market’s first chance to react to the official delivery of the Model 3 electric car, which is critical to the automaker’s financial performance.

Tesla shares were up 1.8% in early trading before reversing course and falling 2.1% in the late morning, perhaps reflecting continued uncertainty over the Model 3’s prospects.

The stock closed down $11.60 to $323.47, a drop of about 3.5%.

While CEO Elon Musk’s admission that the company faces six months of “manufacturing hell” could prove concerning, optional upgrades that would bolster profit margins may prove heartening.

Musk acknowledged that the company will face challenges in accelerating production of the Model 3, including parts availability and factory upgrades.

He is aiming for production of 5,000 units per week by the end of the year.

About one-third of its components will come from outside North America, adding to the supply-chain complexity, though the compact car will be assembled at Tesla’s factory in Fremont, Calif.

The company warned that any new orders might not arrive for up to 18 months as it fulfills about a half-million reservations placed with refundable deposits. Foreign buyers might have to wait even longer.

Evercore ISI analyst Arndt Ellinghorst said Monday that investors should not expect Tesla to deliver on Musk’s longstanding goal to make 500,000 vehicles in 2018.

Tesla announced that initial versions of the Model 3 would carry a starting price of $44,000 before the $35,000 base model is available later this fall.

A version loaded with all available options would cost $59,500, according to Barclays.

It’s “one of the oldest car dealer advertising ‘tricks’ ” to promote “a low price of a base car few buyers may want,” then persuade buyers to purchase a more lucrative model once they’re in the showroom, Barclays analyst Brian Johnson said Monday in a note to investors.

Still, “we are somewhat heartened that pushing options helps margins,” Johnson said, adding, “We actually can’t fault Tesla for its pricing strategy.”

The question is whether “similarities to legacy car sales tactics might dim the enthusiasm of the faithful,” Johnson said.