Title: Tesla Slashes Model Y Prices in China, Faces Intensifying Competition
Word Count: 383
In a move to maintain its position in the highly competitive Chinese electric vehicle (EV) market, Tesla has once again lowered prices on two of its Model Y trims by 4%, marking the third price reduction for the popular crossover EV in China. This decision comes amidst increasing competition from local rival companies such as BYD, Li Auto, and XPeng, who have recently launched their own crossover EVs.
However, the base Model Y variant has not been affected by the price reduction. Despite this, the move is seen as a response to the growing challenge posed by domestic EV manufacturers.
In addition to the price cut, Tesla is also offering an insurance subsidy of RMB 8,000 for in-inventory Model 3 vehicles in China. This further aims to attract potential customers and boost sales amid tough competition.
Rumors have been circulating about the upcoming release of an updated Tesla Model 3, codenamed Highland. This has added to the already intense competitive landscape, as the updated model is expected to offer new features and improvements.
Tesla has been implementing price reductions globally throughout 2023, but this strategy has put pressure on its gross margins. In the second quarter, the company reported a decline in total gross margins and auto gross margins. As a result, Tesla’s stock has been on a downward trend since the release of its Q2 financials on July 19.
Despite surpassing earnings and revenue forecasts, concerns about falling gross margins have weighed heavily on investor sentiment. Cathie Wood and her firm Ark Invest have also contributed to the decline by selling over 100,000 shares of Tesla last week.
The stock dropped 1.7% on Monday, closing at 238.81, and fell over 1% on Friday, closing at 242.65. Additionally, the decline broke support at the stock’s 50-day and 10-week moving averages, signaling a sell signal according to IBD analysis.
Cathie Wood sold $7.7 million worth of Tesla stock on Friday, in addition to her previous sale of over 76,000 shares for about $18.75 million on Thursday. Despite these setbacks, Tesla stock still remains on IBD Leaderboard and the IBD Big Cap 20, ranking third in the automaker industry group. It continues to receive strong ratings for Composite, Relative Strength, and EPS.