Tesla CEO Elon Musk had said that the company would lower car prices if inflation comes down. The tweet comes barely a month after the company hiked prices across all its US models.
In June, Tesla increased the price of its Model 3 Long Range by $2,500 to $57,990 and Model Y Long Range by $3,000. Together, Model 3 and Model Y account for most of the company’s deliveries.
The price of the dual-motor all-wheel drive Long Range Model S also went up by $5,000, now costing $104,990. The Plaid model, launched in 2021 and offering a higher range, remains priced at $135,990. It’s important to note that the company increased car prices multiple times in 2021 due to rising costs of materials like steel, aluminum, nickel, and cobalt, which affected manufacturing expenses for all electric vehicle makers.
However, the June price hike came as somewhat surprising to the markets. While US inflation has been rising and hit a new pandemic high of 9.1% last month, commodity prices have fallen.
Tesla produced 258,580 cars in the second quarter of 2022. Since the first half of 2020, when COVID-19 lockdowns in China and the US, led to cutbacks in Tesla’s production, the company has been delivering a record number of cars every quarter.
The second quarter of 2022 marked the first time in two years that Tesla’s production dropped on a quarterly basis. However, the company attempted to ease concerns by announcing that production in June set a new record. Next, the markets will focus on the company’s earnings report, which is set to be released later this month.
Tesla to Report Second Quarter Earnings
Markets would watch the impact of China’s lockdowns when Tesla reports its earnings. The Shanghai Gigafactory is believed to be the company’s most productive and profitable plant. Also, the company’s commentary on 2022 production guidance would be in focus.
The second quarter earnings season has been mixed so far. JPMorgan spooked markets with its commentary on the economy yesterday. It also suspended its stock buyback. The next major earning would be from Netflix which has recently announced a partnership with Microsoft for its ad-supported version. Netflix is the worst performing FAANG stock this year as investors have been wary of the streaming giant amid slowing growth.
Coming back to Tesla, which has held the crown of the world’s largest EV company for a long, lost the title to Chinese company BYD Motors. BYD, which is backed by Warren Buffett’s Berkshire Hathaway, reported a four-fold rise in deliveries in the first half of 2022 and delivered 641,350 new energy vehicles which were far ahead of the 564,743 that Tesla delivered.
Some Analysts Find Tesla Stock as a Buy
Wall Street has been always divided on Tesla stock and we see wide dispersion in its target prices. However, the stock got a bullish rating as Truist initiated Tesla as a buy on Wednesday. Truist analyst William Stein said, “We believe the company’s best days, in terms of volume production, product innovation, and, especially AI innovations, are still down the road.”
Musk believes that the company’s software capabilities, which include the Autopilot and the yet-to-be-launched Robotaxis would drive the stock higher. Earlier this year, the company raised the price for its FSD (full self-driving) by $2,000. However, the FSD has not struck the right chord with the US transport regulator which has opposed the nomenclature calling it misleading.
Musk has recently been in controversy after he backed out of the deal to acquire Twitter. The social media company has sued Musk to complete the acquisition.
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