Tesla curbs paint choices to simplify production - Roadshow

Flat Earth and Tesla Roadster

Flat Earth and Tesla Roadster

The two colors, Obsidian Black Metallic and Silver Metallic, will disappear from Tesla's site on Wednesday, confirms Musk.

In addition to removing the two colors, Tesla also chose to raise prices on two other paint options, Pearl White Multi-Coat and Red Multi-Coat.

The company, based in Palo Alto, California, has struggled to vault from a niche maker of expensive electric cars into a mass-market automaker.

Contrary to an emerging Tesla bear thesis that demand for the Model 3 is declining, the analysts noted that the electric vehicle maker is now focused on selling higher-margin cars such as the Model 3 Performance and the Long Range AWD Model 3, where "demand continues to exceed what is being produced". Musk has promised that as it sells more Model 3s the company will turn a sustained net profit starting this quarter.

Tesla didn't immediately respond to a request for comment as to why the metallic colors were problematic for production, or what Musk means by "higher price", but we'll update this post if we hear back.

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Customers should check for current pricing and packaging options on Tesla's website, the statement said.

According to some tech industry analysts, Tesla's move to ditch paint options will just be the first of the many measures that the company is willing to implement in order for it to achieve a more simplified production process.

On Tuesday, longtime bullish brokerage Nomura Instinet downgraded the stock to "neutral" from "buy" and slashed its price target by US$100 to US$300, citing Musk's "erratic behavior". Optimism about Tesla's Model 3 progress led analysts at research firm Baird to publish a note on Monday urging investors to "buy even with the drama". "During the second quarter, the switch seemingly flipped", analyst Romit Shah wrote. Among Shah's concerns: The increasing number of Musk tweets per day, the cave diver accusation, Musk's outburst on an earnings call, his taunts of short sellers and his appearance on Joe Rogan's podcast. As a result, Tesla lost its chief accounting officer, Dave Morton, because Musk wasn't interested in hearing about potential problems involving the take-private transaction.

Shah added, "We believe that Tesla is in need of better leadership (an about face) and are moving to the sidelines until we see what happens with management".

Tesla on Tuesday said it manufactured 2,020 Model 3 vehicles in the last week of its first quarter - but missed its target of 2,500.

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