Tesla (TSLA) recently announced its plans to increase prices for its Model Y vehicles in the United States and Europe. The price hike is set to take effect on April 1 for U.S. customers and on March 22 for European customers. Additionally, Tesla is currently offering discounts on Model Y trims in China, aiming to maintain sales momentum.
The decision to raise prices comes following Tesla has been aggressively cutting vehicle prices and offering discounts for more than a year. However, this strategy has been met with mixed reactions from analysts. Some argue that it is not helping demand and is hurting the company, while others maintain that the price hikes do not indicate rising demand.
Troy Teslike, a respected source of delivery estimates and Tesla data tracking among retail Tesla investors, noted that the U.S. price increase is not due to high demand. On the contrary, inventory levels are currently high, and Tesla’s message seems to be urging customers to buy now before the price increase.
This development comes at a time when Tesla is heading for a potential delivery miss for the first quarter of the year. While Wall Street consensus expects Q1 deliveries of 487,000 units, many analysts have recently lowered their predictions.
In terms of stock performance, TSLA shares experienced a rebound on Monday, surging by 6.6% to 174.36. However, the stock had faced a significant drop last week, falling to new lows not seen since May 2023. March has been a challenging month for Tesla, with a 19% decline in its stock value.
The negative sentiment surrounding Tesla is reflected in recent downgrades by Wells Fargo and UBS. Wells Fargo downgraded Tesla from equal weight to underweight, with a price target of 125, reflecting a 23% downside risk to current levels. UBS also cut its Tesla stock price target and delivery forecast for the first quarter and the full year.
Looking ahead, Tesla’s future earnings outlook remains uncertain. Analyst consensus suggests that 2024 earnings may be below those of 2023, indicating another year of negative growth. Some analysts have even projected potential losses for Tesla this year.
In terms of industry rankings, Tesla currently holds the eighth position in the 35-member IBD Auto Manufacturers industry group. Its stock has a Composite Rating of 28 out of 99, a Relative Strength Rating of 9, and an EPS Rating of 68.
Overall, Tesla’s recent price hikes and discounts, along with the uncertainty surrounding its delivery numbers and future earnings, point to a challenging period for the company. Investors and analysts will closely monitor Tesla’s performance in the coming months to assess its ability to navigate these headwinds. The electric vehicle market, as a whole, continues to evolve rapidly, driven by advancements in technology and increased competition.
