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Tesla Inc. (TSLA) - Get Tesla Inc Report shares tumbled to a four-month low Tuesday following a report that its flagship Model 3 sedan could face import restrictions in China that will hold up sales in the world's biggest car market.

China's Caixin news agency reported that customs officials in Shanghai had suspended clearances and were refusing to allow 1,600 Model 3s from entering the world's second largest economy as a result of mis-labeling on the electric vehicles that would have made them illegal to operate under Chinese law. The Caixin report also said import suspension would prevent Model 3s that have already passed customs from being sold to Chinese customers until the labeling issue had been addressed.

Reuters later reported the issue was being address by Tesla, and that authorities had accepted the company's plans to clear up the labeling issue, citing sources familiar with the matter. 

Tesla was also hit by a price target downgrade from Barclays analyst Brian Johnson, to $192 from $210, who argued that Model 3 price cuts have eroded the stock's bullish narrative of "Tesla being the next Apple, selling high-volume EVs at a premium price point and at high gross margins."

Tesla shares closed off 3.1% at $276.54, a move that extends the stock's year-to-date decline to around 11%. It was the stock's lowest close since Oct. 22.

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Tesla will cut an additional 81 jobs at its main production plant in Fremont, California, the San Jose Mercury News reported, citing state employment department documents. The move will bring total layoffs at the plant for the month to 883, the paper reported. 

China is a key market for Tesla, which only last week unveiled a $35,000 version of the Model 3 that it hopes will attract around 500,000 buyers by the end of the year.

"If you're in the automotive industry you'll understand how significant this is but maybe it's not as obvious to everyone is Tesla has the first wholly owned manufacturing facility in China for any -- of any automotive company," founder and CEO Elon Musk told investors in January. "So this is profound, and we're very appreciative of the Chinese government allowing us to do this."

Musk said the move to offer a cut-down version of the flagship electric car would likely result in a first quarter loss, only weeks after telling investors he would turn the clean energy carmaker into the black. 

Tesla said Thursday it will offer a $35,000 Model 3 with a reduced driving range of 220 miles and a slimmed-down interior. Increasing price points will boost both the range and the top-end speed of the Model 3, the company said, while buyers will be able to receive the new car withing two to four weeks.

Tesla also said it would start shutting down its network of stores and showrooms to focus solely on online sales, a move that, along with the increased delivery costs linked to the new Model 3 sales, will carve into profits for the three months ending in March.