An unexpected increase in the supply of nickel, a key ingredient in the batteries that power the company's electric vehicles, is expected to push prices lower.
Chinese miner Tsingshan Holding Group, the world's top stainless-steel producer, will soon start supplying nickel matte to Chinese battery material producers, with plans to expand nickel investments in Indonesia, Bloomberg reported.
Last week, benchmark nickel prices touched a six-year high on expectations that demand from electric-vehicle producers would surge.
Musk said in February that nickel supply was Tesla's top concern for scaling lithium-ion-cell production.
The upside for nickel prices is expected to be capped until October when Tsingshan is expected to start deliveries, Bloomberg reported.
Nickel prices were down 6.3% to $154.61 an ounce, according to Bloomberg.
Tesla shares at last check were off 5.5% to $617.53. Through Wednesday's close, the stock was off 27% since it touched a 52-week high above $900 in late January.
Last month, Tesla halted production at its Fremont, Calif., plant for two days due to parts shortages. Media reports specified that production of the Model 3 sedan had been temporarily suspended.
Tesla had said in January that it might be hurt by a global semiconductor shortage and logistics disruptions at ports.
Separately, Ron Baron of Baron Capital Management told CNBC that he sold 1.8 million shares of Tesla over the past six months.
Baron, who is chairman, CEO and portfolio manager at the New York firm, sold the stock as it became too large a percentage of certain client portfolios.
Baron said he expected the stock to reach $2,000 in the next decade. He said he sold the shares to mitigate risk for clients, CNBC reported.
Jim Cramer commented on the Baron sale on Twitter Thursday.