Tesla Inc TSLA investor and Future Fund Managing Partner Gary Black, on Friday, reiterated his criticism for price cuts on Tesla’s electric vehicles and expressed disappointment at company CEO Elon Musk for failing to switch strategy.
What Happened: Black has been a long-standing critic of Tesla’s strategy of cutting prices to boost sales. According to Black, price cuts aren’t rational if competitors match them and Tesla gets no bump up in terms of volume.
“I thought by now Elon would learn from his mistakes. But maybe he'll keep doing the wrong thing under the misplaced belief he can cut EV prices to zero margin and make it up on FSD subscriptions. I don't believe [Elon Musk] is that foolish,” Black wrote on X, formerly Twitter.
In another post, Black noted that though Tesla stock rose 102% over the past year despite price cuts, it also slumped 65% in 2022 once the company started offering discounts on its vehicles before it eventually started cutting prices. The jump in stock over 2023 is hence not proof of price cuts having worked, Black opined. Further, the stock saw a 29% slump over two years as compared to the Nasdaq 100 index, which rose 3%, Black added.
See Also: Everything You Need to Know About Tesla Stock
Why It Matters: Tesla started cutting prices in China in late 2022 and then in the U.S. starting 2023. Though the company has also hiked prices intermittently, the starting prices on the vehicles remain lower than before the company commenced price cuts.
Since the start of 2024, Tesla has already cut prices on select vehicles in China and Europe. Earlier this month, Tesla cut prices in China by as much as 6% on the Model 3 and by as much as 2.8% on select Model Y SUV versions. This was followed by a price cut of up to 9% on the Model Y in Germany.
Check out more of Benzinga's Future Of Mobility coverage by following this link.
Image via shutterstock
© 2024 Benzinga.com. Benzinga does not provide investment advice. All rights reserved.
Trade confidently with insights and alerts from analyst ratings, free reports and breaking news that affects the stocks you care about.
