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- Tesla stock continued its deep year-to-date decline on Friday as the company deals with an inventory buildup.
- The company implemented price cuts of about $5,000 for some Model Y vehicles this week.
- Separately, a report said Tesla was scrapping its low-cost Model 2 plans.
Tesla‘s stock decline continued on Friday after a report said it was scrapping its low-cost Model 2 plans, and as it deals with a sizable inventory buildup, leading to sharp price cuts for some of its Model Y vehicles.
The stock dropped as much as 6% on Friday, extending its week-long decline to about 8% and its year-to-date decline to about 34%.
Reuters reported that Tesla canceled plans to develop its long-promised low-cost car that was expected to cost just $25,000, citing three sources familiar with the matter as well as internal company messages.
Instead of developing a low-priced car, Tesla will continue to focus on developing self-driving robotaxis, according to the report.
"Elon’s directive is to go all in on robotaxi," a source told Reuters.
The reported move comes amid concerns of profit margin deterioration at Tesla, as well as intensifying competition from low-cost carmakers in China.
Tesla CEO Elon Musk responded to the report on X, saying "Reuters is lying (again)."
Tesla reported first-quarter vehicle deliveries of 386,810 last quarter, well below analyst estimates and 46,561 vehicles below its first-quarter production of 433,371, representing the company’s biggest-ever stockpile of vehicles, according to Bloomberg.
Tesla appears to be clearing that inventory buildup via aggressive price cuts on its most popular selling vehicle, the Model Y. As of Friday morning, some Model Y vehicle builds were marked down by about $5,000, including for the long-range and performance versions.
The price cuts on certain Model Y vehicles come just a few days after the company said it would be raising the price of its Model Y by $1,000.
Weakness in first-quarter vehicle deliveries was attributed to a temporary factory shutdown in Berlin, shipping disruptions in the Red Sea, and the early production ramp of the updated Model 3 at its California factory, according to Tesla.
But JPMorgan analyst Ryan Brinkman said weakening demand for Tesla vehicles is also likely a big contributing factor to the recent sales miss, especially amid intensifying competition from China and the growing allure of hybrid vehicles in America.
Brinkman said the difference between vehicle production and deliveries in the first quarter "dispels the notion that 1Q deliveries were somehow supply rather than demand constrained," according to a Wednesday note.
Brinkman lowered his Tesla price target to $115 and warned investors about the company’s "demanding valuation."
"With 1Q24 deliveries now known to have contracted, we are highly confident both automotive and total company revenue will be negative in 1Q, likely causing even the most bullish investors to take a sentiment check," Brinkman said.
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Publicado: April 5, 2024 at 09:06AM
