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Tesla (TSLA) has cut prices on Model 3 and Model Y in the US and Europe, one week after big price cuts in Asia. The move will boost sales as more models qualify for the US tax credit as analysts expect 2023 to be a difficult year for the auto industry. Tesla shares fell sharply early on Friday, but managed losses by the close of trading.General Motors and other automakers also pulled out.
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Elon Musk’s EV giant has cut US Model 3 prices by 6% to 14%, depending on trim. The standard Model 3 RWD has been reduced by $3,000 to $43,990. When the Inflation Reduction Act (IRA) tax credit is applied to the vehicle, a consumer who meets the income limit will pay his $36,240.
The Performance Model 3 trim was lowered from $9,000 to $53,990, below the $55,000 tax credit limit. Meanwhile, Tesla’s base Model Y has been slashed to $13,000, or nearly 20%, to $52,990, which is also below the tax credit limit. The performance variant of that vehicle is priced at $56,990, which also drops him $13,000.
Tesla also cut prices significantly in Europe, at least in Austria, France, Germany, Holland, Norway, Switzerland and the UK.
The US and European price cuts come after Tesla cut Model 3 and Y prices in China and major Asian markets a week ago. Tesla has cut the base price of the Model 3 in China by more than 13% to $33,570.
The price cuts should boost demand, especially in the US, but raise concerns about Tesla’s high profit margins.
tesla stock
Tesla shares fell 6% early on, but managed losses throughout the day. TSLA shares fell 0.9% to 122.39 at the market close on Friday. His TSLA shares rose 0.3% to 123.56 on Thursday, still below his long-falling 21-day line. The stock fell 0.8% on Tuesday after gaining 5.9% on Monday.
Tesla’s price cuts also played a role general motors (GM), ford motor (F), Rivian (RIVN) and Clarity (LCID), etc. GM stock fell his 4.8%. Ford down 5.3%, Lucid down 1.9%, RIVN shares down 6.4%
Tesla Stocks, IRA Rule Confusion and Lithium.
The US base Model 3 uses a cheap lithium iron phosphate (LFP) battery made in China. However, the bulk of the IRA tax credit, $3,750, relates to EV batteries from the United States or countries that have free trade agreements with the United States.
The IRS said it will finalize these battery rules in March. For now, it looks like the base Model 3 is eligible for the full $7,500 credit.
The Biden administration’s Inflation Reduction Act seeks to support domestic US lithium businesses in order to loosen China’s control over lithium processing. Under the new law, there are criteria that EVs must meet in order to qualify for the tax credit. By 2024, EV batteries must use at least 40% of domestically extracted or processed minerals. It will rise to 80% by 2027.
Tesla is gearing up for this and appears to be building a lithium processing facility in Texas. Tesla has confirmed that it plans to invest $365 million in its lithium plant. This will create about 165 full-time jobs and an additional 250 construction jobs over about two years.
During Tesla’s second-quarter earnings call in late July, Musk called the lithium refining business “a license to print money.”
Tesla Inventory and Delivery
Tesla’s deliveries hit a record 405,278 in the fourth quarter, missing out on lowered forecasts despite aggressive year-end incentives. Deliveries were up 31% year-on-year, up nearly 18% compared to his 343,830 in the third quarter. In 2022, he also increased shipments by 40% to 1,313,851 units, but he is well below the company’s growth target of 50%.
Analysts had expected Tesla to deliver about 420,000 vehicles in the fourth quarter, but that was a significant drop from higher estimates. Tesla’s third quarter shipments were also lacking.
Tesla production reached 439,701 in the fourth quarter, more than 34,000 ahead of deliveries. Production in the third quarter exceeded sales by just over 22,000.
With increased output at the company’s Berlin and Austin factories, Tesla’s overall production capacity is now well over 450,000 vehicles per quarter.
TSLA’s stock is down about 65% in 2022. Analysts report that demand concerns and CEO Elon Musk’s Twitter attention weighed on the stock.
on friday, city ​​group (C) Analyst Itay Michaeli lowered his price target on Tesla shares to 140 from 176.
“We are positive about Tesla’s strong position in premium EVs globally and especially the company’s improved execution in recent years,” Michaeli told investors.
Follow Kit Norton on Twitter @Kit Norton for more coverage.
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