Tesla (TSLA) announced over the weekend it will increase U.S. Model Y prices on April 1 while also hiking Model Y prices in Europe on March 22. Meanwhile, the global EV giant is also currently offering fresh inventory discounts for Model Y trims in China. Tesla stock rebounded early Monday.
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The company will increase the price of all Model Y trims in the U.S. by $1,000 next month while Model Y prices in Europe will go up by around $2,100 on Friday. In China, Tesla is offering discounts on inventory Model Y vehicles of between $1,000-$1,500.
The pricing move comes after Tesla, to maintain sales momentum, has aggressively cut vehicle prices and offered discounts for more than a year. As a result, auto gross margins, which peaked at 30% in Q4 2021 amid industry chip shortages, have plunged well below 20%.
Analysts argue the strategy is not helping demand and is hurting the company. Tesla observers report that inventory is currently quite high and that the EV giant’s price hikes do not indicate rising demand.
Troy Teslike, a respected source of delivery estimates and Tesla data tracking among retail Tesla investors, wrote on X, formerly Twitter, Saturday that the U.S. price increase is “not because of too much demand.”
“Base on the latest data, inventory is currently high,” Teslike posted. “Tesla’s message is to buy now before the increase.”
Tesla Is Plunging, But It’s Not Getting Cheaper. Here’s Why.
With the first quarter ending in just two weeks, Tesla appears to be heading for a delivery miss. Wall Street consensus currently still has Q1 deliveries of 487,000 units, according to FactSet. However, many analysts have cut predictions in recent days.
Tesla is expected to report Q1 deliveries in early April.
Tesla Stock Performance
TSLA shares surged 2.7% to 167.81 during market action Monday. Last week, Tesla stock dropped 6.7% to 163.57. On Thursday, Tesla stock fell 4.1% to 162.50, hitting new 2024 lows and levels not seen since May 2023. TSLA is down 19% in March.
Wells Fargo downgraded Tesla to underweight, from equal weight, last week with a price target of 125, down from 200. The firm’s underweight rating is equivalent to a sell rating and its price cut represents a 23% downside risk to current TSLA levels.
Meanwhile, UBS also cut its Tesla stock price target to 165, from 225, and maintained a neutral rating on the shares last week. UBS lowered its Q1 delivery forecast to 432,000 units, from its previous 466,000 view. The firm also cut full-year deliveries to 1.96 million units, from 2.02 million previously.
With 2023 in the rearview mirror, analyst consensus now has 2024 Tesla earnings below 2023’s level, signaling another year of negative growth for this growth stock. Wall Street expects Tesla earnings per share of just $2.97 a share in 2024, according to FactSet. That would be a around a 5% decline vs. last year’s $3.12.
The FactSet “sharp consensus” of recent analyst calls pegs 2024 EPS at just $2.62.
Morgan Stanley Tesla bull Adam Jonas recently issued an investor note in which he cut his Tesla 2024 earnings projections by 25%, saying that the EV giant could “potentially” lose money this year.
Jonas slashed his Tesla price target to 320, down from 345, but maintained an overweight rating on the shares. Jonas also whittled down his Tesla 2024 EPS projections to $1.51, his previous view was $2.04 per share, with auto gross profit margins, excluding regulatory credits, sinking to 11.4% as the analyst foresees continued demand issues for EVs.
The EV giant ranks eighth in the 35-member IBD Auto Manufacturers industry group. The stock has a 28 Composite Rating out of a best-possible 99. Tesla stock also has a 9 Relative Strength Rating and a 68 EPS Rating.
Please follow Kit Norton on X, formerly known as Twitter, @KitNorton for more coverage.
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