Tesla stock tumbles 5% after the EV maker cuts prices again

Tesla stock fell as much as 5% on Monday following news of more price cuts for electric vehicles.
The company also said it will launch a new Shanghai factory to create Megapack batteries.
The EV maker announced over the weekend that it will reduce vehicle prices by as much as $5,000.

Tesla stock fell as much as 5% on Monday after the company announced it will reduce the prices of its electric vehicles.

A post on the company's website on Saturday said the carmaker plans to lower prices on both the Model S and Model X vehicles by $5,000. Additionally, the price of Tesla's Model 3 sedan has been reduced by $1,000, while its Model Y will be $2,000 cheaper.

The price cuts will hit Tesla's margins in the near term, but analysts such as Alexander Potter of Piper Sandler say it's all part of a bigger plan to win more market share and accelerate the decline of gas vehicles.

Others are using it to support forecasts that Tesla stock isn't attractive to buy at current levels.

"While many investors have been hopeful that 1Q margins might be the bottom, we don't believe that will necessarily be the case, particularly given our belief that further cuts are likely," Toni Sacconaghi, a Bernstein analyst who has the equivalent of a "sell" rating on the stock, wrote in a note to clients.

Still, earlier price cuts from Tesla helped boost vehicle sales, as it reported a 36% increase in first-quarter deliveries last week. From the start of the year to the end of March, Tesla sold 422,875 units, mostly Model 3 and Model Y cars.

The company also announced in a tweet Sunday that its next Megafactory will be opened in Shanghai, and that it will be capable of producing 10,000 Megapacks per year. Construction on the site will begin in the second quarter of 2024, according to Chinese state media outlet Xinhua.

That aim of 10,000 Megapacks per year is equal to about 40 gigawatt hours of energy storage, Xinhua said, and the batteries will be sold around the world.

Currently, Tesla has a Megafactory in Lathrop, California, which can also produce 10,000 Megapacks annually.

In April so far, Tesla stock has dropped roughly 14%, following the 68%-gain it made through the first three months of 2023.

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Contributer : Business Insider https://ift.tt/VwMyYkA

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