Tesla Stock Dives As Tesla Carves Prices Lower In China, Japan, Australia| Investor’s Business Daily

Tesla shares were poised to slide to 30-month lows on Friday after the company increased its discounts on Model 3 and Model Y cars sold in China. The move sent US-traded shares of China’s EV rivals sharply lower, along with Tesla, in premarket trading.

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The price cuts in China, the company’s second in the country in less than 10 weeks, focused increasing attention on a weakening of consumer demand.; Consumers, faced with high inflation, rising interest rates, financing costs and an increasingly uncertain economic outlook, have become more wary of big-ticket purchases.

In October, after years of price hikes, Tesla ( TSLA ) announced its first price drop in China. Tesla began discounting the Model 3 and Y cars in the US, offering prices as low as $7,500 in December for vehicles delivered before the end of the year.

After January 1, Inflation Reduction Act incentives applied to certain Tesla vehicles.

On Friday, Tesla announced on Chinese social media that it will cut prices on its two most popular models in China — both made at its Shanghai facility.

Tesla’s entry-level vehicle, a rear-wheel-drive Model 3, sells for $47,000 in the U.S. Tesla on Friday cut the price of the Model 3 in China by 36,000 yuan, about $7,000. That puts the sticker price at 229,000 yuan — about $32,700. The Model Y now starts at around $37,000.

Engineering innovations and cost controls enabled the reductions, the company said. Tesla also cut the prices of the Model Y and Model 3 in Japan, South Korea and Australia, according to Nikkei Asia.

Analysts continue to bullish on Tesla stock

Previous price cuts have so far failed to buck the trend towards increasingly cautious consumers. Tesla’s car deliveries in China, including domestic sales and imports, fell to 55,800 in December, about half the pace of November sales, according to the China Passenger Car Association.

Last week, Tesla reported deliveries of 405,278 for the fourth quarter. That was up 31% year over year, but below analysts’ expectations of 420,000 units. For the year, Tesla’s deliveries jumped 40%, 10 more than 1.3 million vehicles, short of its target for a 50% increase.

Brokerage Edward Jones upgraded Tesla shares to buy from hold on Thursday. Also on Thursday, Mizuho maintained its buy rating while modestly lowering its price target on Tesla shares to 250 from 285.

Tesla’s price moves point to increasing competition, particularly from China’s BYD ( BYDFF ), in China, Australia and, in late January, Japan. On January 5, BYD launched its premium Yangwang brand and unveiled the first two models, both starting at 1 million yen, or $145,000.

But the benefits of the Inflation Reduction Act point to a tailwind in the U.S. The company’s semi-truck sales appear to be picking up, and production of the Cybertruck truck is likely for a production start in mid-2023. Shares of Tesla- s fell more than 60% in 2022 and are down another 10% in January. Mizuho’s cut price target is 127% above where the stock closed on Thursday.

Among China-based EV makers, Li Auto ( LI ) fell 9% in premarket trade. Nio (NIO) fell 7%. Xpeng (XPEV) fell almost 13%, while BYD remained inactive in early trade.

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