The initial report suggesting Tesla has canceled plans for a low-cost vehicle due to competition in China has negatively impacted Tesla's stock price. However, the impact may be mitigated by Elon Musk's denial of the report. The situation reflects the sensitivity of Tesla's stock to news regarding its product lineup and competitive position, especially in key markets like China. The short-term impact is negative due to the initial market reaction, but Musk's denial could help recover some of the losses if investors believe the company's clarification.