Tesla has already announced heavy discount on its flagship electric SUV Model Y. One will be able to save up to $5,000 on the EV in United States.
Tesla Inc. has pivoted from rapid-fire price-cutting this time a year ago to heavily discounting cars now piling up in inventory.
The automaker offers consumers two ways to buy new vehicles online: to place custom orders, selecting the vehicle type, paint color, wheels and other options, or to peruse pages where Tesla lists the cars it has in inventory.
While Tesla started charging $1,000 more to custom order its best-selling vehicle, the Model Y, at the beginning of the month in the US, it’s offering much bigger markdowns on the SUVs it has in inventory. The rear-wheel drive version, for example, can be had for $4,600 off, while long-range and performance Model Ys are discounted by at least $5,000.
Tesla is offering the deals after producing 46,561 more vehicles than it delivered in the first quarter, adding more cars to inventory than ever before. While the company blamed its volume decline in part on changing over its California plant to make the upgraded Model 3 sedan and shutdowns of its factory in Germany, some analysts weren’t buying it.
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The difference between the number of vehicles Tesla built and sold in the quarter “dispels the notion that 1Q deliveries were somehow supply rather than demand constrained,” Ryan Brinkman, a JPMorgan Chase & Co. analyst who has the equivalent of a sell rating on Tesla stock, wrote in an April 3 report.
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Brinkman cut his price target for the shares to $115 from $130 and lowered estimates for first-quarter revenue and earnings per share. He now projects Tesla will report a $1.3 billion free cash outflow, rather than a more than $300 million inflow, due to an expected record increase in finished goods inventory.
Tesla’s stock has dropped 31% this year, the second-worst showing on the S&P 500 Index. The shares rose as much as 0.9% before the start of regular trading Friday.
First Published Date: 11 Apr 2024, 09:03 AM IST