Meanwhile, the average adjusted earnings estimate for 2022 has declined over 4% from just three months ago. Wall Street analysts started flagging warnings about EV demand earlier this month, with the average 12-month price target for Tesla falling 10% since the end of November. Tesla “appears to have burned through its backlog as they are resorting to promotions to move cars and delivery lead times are 1-2 weeks in the majority of the world.” “Our sense is the company’s market share has peaked and concerns about its over-reliance on China for profits and the factory shutdown are weighing on the stock,” said Jeffrey Osborne, an analyst at Cowen. It has lost 69% its value amid Musk’s Twitter takeover and related distractions, investor jitters about growth assets and most recently, worries that high inflation and rising interest rates will dampen consumers’ enthusiasm for EVs. Those Q4 deliveries were also record results, but they missed Wall Street expectations.But this year the unwinding has come equally fast. In the fourth quarter of 2022, Tesla delivered 405,278 and produced 439,701 units. The company produced 440,808 vehicles in the same period. Tesla said earlier this month that it delivered 422,875 electric vehicles in the first quarter of 2023, just beating Wall Street estimates of around 420,000 units. Any speculation that the cuts would stop in 2023 ended in January when Tesla drastically slashed prices by as much as 20%. Tesla has lowered the sticker price on its vehicles in the U.S. Tesla kicked off its price reduction strategy in October when the company announced price cuts in China up to 9% on the Model 3 and Model Y. Already this year, the price of the base Model Y is 20% lower than it was at the end of 2022. Tesla has said that based on new IRS guidance, the $7,500 credit will be reduced for the Model 3 rear-wheel drive on April 18 to $3,750. as requirements to qualify for the $7,500 federal tax credit tighten. It also lowered prices of its Model 3 and Model Y vehicles. Last week, Tesla reduced the price of its higher-end and aging Model S and Model X vehicles by $5,000 each. CEO Elon Musk said during the company’s Q4 and full-year earnings call in January that the company has “the potential to do 2 million cars this year.” The price cuts have persisted as Tesla pushes to scale its operations and produce 1.8 million vehicles in 2023. Tesla, which has enjoyed one of the higher automotive margins in the sector, does have a bit of cushion. Lowering prices may boost sales, but could also cut into its automotive margins. “Our masterplan has set a clear pathway to achieve that mission: the transformation of cost-intensive small-series products to cheaper mass-series vehicles,” according to the statement. The company said in a statement published by Reuters that the price cuts are of its mission to accelerate the transition to renewable energy. Tesla has cut prices of its EVs sold in China, Europe and North America multiple times since last fall, at times as much as 20%. The reductions, which were as high at 9.8%, were made across the company’s vehicle portfolio, including the Model 3, Model Y performance and its more expensive Model S and Model X variants. The automaker, which lowered prices last week in the United States, has made another reduction, this time in markets throughout Europe and Israel. It’s EV price reduction déjà vu - at least for Tesla vehicles.
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