Tesla Stock: EV Giant Slashes Prices As Much As 25% Ahead Of Earnings

Tesla has cut vehicle prices by up to 25% in anticipation of their Q1 financials next week.

Tesla (TSLA), which announced its 2023 pricing strategy on Friday, has implemented additional vehicle price reductions in Europe, Israel, and Singapore. This is part of the company's ongoing price-slashing strategies ahead of its first quarter financials next week. TSLA shares were slightly lower on Friday.

Tesla reduced prices on Friday in Germany and France for all models of the Model 3, S, and X as well as Model Y Performance. Tesla offered discounts on European models in early March but no official price reductions.

Tesla slashed the prices of its Model 3 & Model Y cars in Germany by 4.5% - 9.8%. In Singapore, the Model 3 & Model Y were reduced between 4.3% - 5%. Tesla has also reduced prices in Israel. According to Reuters, the base rear-wheel Model 3 was priced at 25% less.

Tesla announced last week that it would be reducing the prices of all its EVs in the U.S. The company also cut prices in Australia.

Tesla has decided not to attend the Shanghai Auto Show next week, despite its major Chinese competitors planning to launch new EVs.

Shanghai Auto Show to host the hottest electric vehicles

Tesla shares fell 0.5% on Friday, to 184.99. TSLA has fallen around 10.8% in April after Thursday's 3% rebound. According to MarketSmith's analysis, Tesla stock formed a cup with handle base at a 207.89 purchase point.

This entry, however, is just below 200-day moving median, which can be a warning.

The global electric vehicle maker has reduced the Model S and X price by $5,000 in the U.S. last week. This is the third price cut this year. Model S now starts at $84,990, while Model X begins at $94,990. Tesla also lowered the entry-level Model 3 price in the U.S. by $1,000, to $41,990. Model Y prices were cut by $2,000, to $49990.

Tesla cut Model 3 prices and Model Y price in Australia earlier this week. Tesla cut prices in China in January, following large cuts made in October. Tesla also reduced prices significantly in the U.S., Europe and Asia on January 13, before reducing European prices again early March.

These price cuts and the new U.S. electric vehicle credits lifted deliveries in the first quarter to a record but fell short FactSet's expectations. Once again, production outpaced sales with Model S/X output being nearly twice that of sales.

Tesla will report its first-quarter results on Wednesday. Gross margins are expected to be the focus. Analysts expect earnings to fall 19%, to 86 cents a share. Revenue is expected to grow 27% in Q1, to $23.78 Billion.

Wall Street expects gross margins to be around 21% for the current quarter. Tesla's gross profit margins in 2018 were around 29%, while they will be 24.3% by 2022.

FactSet estimates that the average selling price of a Tesla vehicle in the first quarter was around $47,000. This is down from $51,400 during the fourth quarter, and $52,100 one year ago.

TSLA has recently reduced the price of its U.S. vehicles ahead of the implementation date of new battery and component requirements for EVs to qualify for full Inflation Reduction Act tax credits of $7,500.

The Biden administration announced March 31, that vehicles eligible for a full $7,500 in tax credits must have batteries containing specific amounts of North American components and minerals critical to the vehicle's operation sourced from the U.S.

Vehicles that meet the requirements for critical minerals and battery components will be eligible to receive a tax credit of $3,750.

The battery criteria will come into effect on April 18th, when the list of models eligible for the $7.500 tax credit in full will be released.

The Tesla Model 3 is equipped with a Chinese battery. Tesla's Model 3 website banner informs EV shoppers that the "$7.500 tax credit for Model 3 Rear Wheel Drive will be reduced to only $3.750 on April 18.

IBD's Auto Manufacturers group ranks Tesla third. TSLA has a Composite Rating of 84 out of 99. Tesla stock has a Relative Strength rating of 69. The EPS rating is 99 out 99.

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