Future Tech

Tesla slashes vehicle and self-driving-ish software prices as shares plummet

Tan KW
Publish date: Tue, 23 Apr 2024, 07:41 AM
Tan KW
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Future Tech

After a week beset by disaster after disaster, Tesla has decided to reassure investors that it's still a safe bet … by discounting prices around the world. 

Prices began falling on Friday, when Elon Musk's electric car operation slashed $2,000 off the price of Models Y, X, and S while leaving the sticker prices unchanged on the Model 3 and Cybertruck. By Saturday price tags on the Model 3 had shrunk in China and Germany. Other cuts were reported around Europe, the Middle East, and Africa, a Tesla spokesperson told Reuters.

Tesla also cut its so-called Full Self-Driving subscription by a third in the US over the weekend, slashing the annual price from $12,000 to $8,000.

Speaking on his social media platform X over the weekend, Tesla supremo Elon Musk said price adjustments are an essential part of doing business in the auto industry.

"Tesla prices must change frequently in order to match production with demand," Musk said.

But that hasn't been enough to reassure investors, who caused Tesla shares to plunge below $140 on Monday morning - just a day before Tesla plans to hold its Q1 2024 earnings call. Great timing made even worse by the week Tesla has just had.

It started last week Monday with news Tesla was laying off 10 percent of its employees in the face of decreased deliveries. That was followed not long after by the company asking shareholders to reinstate Musk's $56 billion pay package that was recently voided by a Delaware court - again, bad timing given the state of Tesla lately. 

Then, on Friday, all 3,878 Cybertrucks on the road were recalled because their accelerator pedals kept getting wedged against the vehicle's interior, causing unintended acceleration. The fix? A single rivet to keep the piece in place.

Along with cutting prices over the weekend, Elon Musk also postponed a scheduled trip to India in which he was predicted to announce Tesla's expansion into the country. Musk said "very heavy Tesla obligations" caused him to postpone the trip.

All these factors, combined with a fresh round of price cuts, have put Tesla in a delicate position, though not a unique one.

Tesla's shrinking shares are being echoed by Chinese EV maker Li Auto, which has also seen its share prices collapse of late. Like Tesla, Li has slashed its vehicle prices and seen sales fall short of analyst expectations. EV sales have generally been on a decline of late, putting some of the world's biggest manufacturers - like Tesla and Li - in a relatively tight spot.

Whether Tesla's troubles are only linked to a changing EV market isn't necessarily the case, though. Tesla recently announced plans to kill its low-priced Model 2 vehicle - a seemingly ideal move when consumers want lower priced electric cars. Instead, Tesla seems to have dumped all its eggs in the self-driving basket, with Musk proclaiming Tesla would unveil a new robotaxi in August.

Analysts weren't impressed. Deutsche Bank's Emmanuel Rosner downgraded Tesla from buy to hold while also lowering its price target from $189 to $123. The reason for the downgrade, Rosner said, was the Model 2 and robotaxi news.

Come tomorrow, and Tesla's earnings call, we might just see how low those shares can go. ®

PS: Mercedes now reckons it's the first automaker to sell actual self-driving cars in America that don’t require drivers to keep an eye on the road.

 

https://www.theregister.com//2024/04/22/tesla_cuts_prices/

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