Tesla Inc. (TSLA) shares slipped on Monday as the electric vehicle maker confronted regulatory scrutiny and revelations about a spectacular supply contract collapse.
Safety Probe Raises Concerns
U.S. auto safety regulators recently opened a new defect investigation into the 2022 Tesla Model 3 over concerns that its emergency door release may be difficult to find or use during an emergency, according to Reuters. The probe covers roughly 179,071 vehicles and follows a petition claiming the mechanical release is hidden, unlabeled and not intuitive, especially for rear-seat passengers.
The investigation adds to Tesla's legal challenges related to fatal crashes in recent years, creating another headwind for investor sentiment.
Battery Supply Deal Evaporates
In a separate development, South Korean battery-material supplier L&F disclosed that the value of its 2023 supply agreement with Tesla has collapsed from an expected $2.9 billion to just $7,386, Reuters reported. Yes, you read that correctly: from billions to thousands.
L&F had been planning to supply high-nickel cathode materials for 4680 cells through 2025. But with Tesla producing fewer of the batteries than planned and the Cybertruck's sales falling short of CEO Elon Musk's ambitious forecasts, the company ultimately needed far less material than originally anticipated. That's a contract that basically went to zero, revealing just how dramatically Tesla's production plans shifted.
Technical Picture Remains Constructive
Despite Monday's selling pressure, Tesla is currently trading above its key moving averages, suggesting underlying bullish sentiment. The stock sits 0.7% above its 20-day simple moving average, 4.5% above its 50-day SMA, and 12.3% above its 100-day SMA, indicating solid upward momentum.
The RSI is at 57.30, sitting in neutral territory with room to gain momentum before reaching overbought conditions. Meanwhile, MACD remains above its signal line, indicating bullish momentum despite Monday's drawdown.
Key support is at $383.00, while resistance is at $474.00. The golden cross in September, when the 50-day SMA crossed above the 200-day SMA, is a positive signal for the longer-term trend and often indicates a shift to a more sustained bullish phase.
Over the past year, TSLA has climbed 11.25%, underscoring a resilient longer-term uptrend. The stock now sits at 87.8% of its 52-week range, placing it closer to its highs than its lows. While this positioning highlights strength, traders should stay alert for potential pullbacks as the stock approaches key resistance levels.
Price Action: Tesla shares were down 2.60% at $462.84 at the time of publication on Monday, according to market data.