© Reuters. Tesla (TSLA) slides following additional U.S. price cuts
By Michael Elkins
Shares of Tesla (NASDAQ:TSLA) are trading down more than 2% in pre-market trading on Wednesday after the electric vehicle company cut prices for the sixth time this year.
Tesla’s website showed late on Tuesday that it cut prices of its Model Y ‘long range’ and ‘performance’ vehicles by $3000 each and of its Model 3 ‘rear-wheel drive’ by $2,000 to $39,990.
The cuts come ahead of the company’s first quarter earnings, which are due to be reported today after the closing bell.
The company cut U.S. prices of its base Model 3 by 11% so far this year and that of its base Model Y by 20% – moves that come as the United States, its largest market, prepares to introduce tougher standards that will limit EV tax credits.
The company also recently lowered prices in Europe, Israel, and Singapore, as well as in Japan, Australia, and South Korea, expanding on a discount campaign it started in China in January. The price cuts are meant to spur demand for vehicles.
Tesla reported a sequential rise of just 4% in its first quarter deliveries, much less than the 17.8% sequential climb in the prior quarter. That has prompted several analysts to predict more price cuts as competition rises in the U.S. and Tesla plays catch-up with BYD (SZ:002594) in China.
For the first quarter, Wall Street expects the company’s auto gross margin to hit a more than three-year low of 23.2%.
Its revenue is expected to rise 24.2% year-on-year to $23.29 billion, but analysts’ average profit estimate has fallen by about 2.4% in the last three months, according to Refinitiv data.
Shares of TSLA are down 2.14% in pre-market trading on Wednesday.