Tesla, Inc. TSLA shares closed at a five-month low on Thursday. The stock has lock-stepped with the broader market in recent sessions, although its weakness began well ahead of the current market mayhem. Falling margins in the wake of successive price cuts were among the chief reasons attributed to the stock slide and so news of upward adjustments to prices of one of its EV models was met with optimism by a Tesla investor.
What Happened: Updated pricing provided on Tesla’s website showed that the price of the Model Y dual-motor, all-wheel-drive, Long Range variant in the U.S. is now at $48,990, a $500 increase.
Tesla has also adjusted prices in China. The price of the high-end, dual motor, all-wheel-drive, performance variant is 363,900 yuan ($49,738), up from the previous pricing of 349,900 yuan ($47,825). In dollar terms, the hike amounted to $1,913.
Commenting on the moves, Future Fund’s Gary Black said, ” Positive Signal.”
See Also: Everything You Need To Know About Tesla Stock
Why It’s Important: Tesla’s core auto gross margin, which by definition is auto gross margin, excluding regulatory credits, has been on a declining trend ever since the company began cutting prices in Jan. 2023. The situation worsened so much that the company reported below-consensus earnings for the quarter that ended Sept. 2023.
Black is among the camp that argues that the price cuts have proved inelastic, or in other words, the demand has not increased significantly following the price cuts.
Tesla’s deliveries declined sequentially in the third quarter and also missed expectations. Even as CEO Elon Musk continues to blame the economy and higher interest rates for the slow uptake, Black has said in the past that price cuts can only produce a sugary high, and for a sustainable uptick in sales the company has to spend on advertising to increase awareness regarding EVs in general and underline the merits of its own vehicles.
Tesla ended Thursday’s session up 3.14% at $205.76, according to Benzinga Pro data.
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