Tesla (TSLA) is cutting vehicle prices once again and offering incentives to attract consumers just days after reporting worse-than-expected first-quarter vehicle deliveries with analysts cutting full-year earnings predictions. TSLA shares advanced Thursday.
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The global EV giant reduced Model Y vehicle prices in Australia by more than 9% in some instances Thursday, bringing the base price down to around $42,240. This comes as the Australian EV market hit a new monthly high in March with more than 10,000 vehicle sales. Tesla is the sixth bestselling auto brand in Australia, according to Australia's Federal Chamber of Automotive Industries.
Tesla's price cuts in Australia follow the company's decision on April 3 to announced 0% financing for new orders of the Model 3 and Model Y in China. The incentive runs through the end of April and is Tesla's first interest-free promotion for China, the world's biggest EV market.
Meanwhile, Tesla increased its U.S. prices for all Model Y trims on April 1. Tesla raised prices on Europe Model Y vehicles on March 22. In China, Tesla also hiked prices on its entire Model Y line by around $690 on April 1, even as some incentives expired.
However, Tesla continues to have large discounts on inventory Model Y vehicles in the U.S. and other markets.
Tesla Shuffles Prices After Q1 Delivery Announcement
Tesla stock gained 1.6% to 171.05 during market action Thursday. On Wednesday, TSLA rebounded 1% to 168.38. Earlier this week, Cathie Wood purchased a combined 319,000 shares of Tesla in consecutive trading sessions, according to the daily trade disclosures.
To maintain sales momentum in 2023 in 2024, Tesla has aggressively cut vehicle prices and offered discounts. As a result, auto gross margins, which peaked at 30% in Q4 2021 amid industry chip shortages, have plunged well below 20%.
HSBC lowered its price target on Tesla to 138 from 143 on Wednesday and kept a reduce rating on the shares. The firm added that Tesla has cut prices 9% on average year-to-date, but that cheaper cars are not necessarily driving higher volumes.
The recent pricing maneuvers comes on the heels of Tesla reporting global deliveries of 386,810 in Q1, undercutting even the lowest estimates and marking the lowest quarterly number since 344,000 in Q2 2022. The result was roundly criticized by bulls and bears alike calling the quarter a disaster. Tesla blamed the first-quarter performance on the production ramp up of the updated Model 3 along with factory shutdowns.
Full-Year EPS Predictions But Q2 Looking Up?
With Q1 done, analyst consensus now has 2024 Tesla earnings firmly below 2023's level. That signals another year of earnings declines for this growth stock. Wall Street currently expects Tesla earnings per share of just $2.78 in 2024, according to FactSet. That would be more than a 10% decline vs. last year's $3.12.
Wall Street's 2024 EPS consensus estimates for Tesla have now come down more than 26% since the end of 2023. With Tesla reporting earnings on April 23, Wall Street is likely just beginning to cut earnings predictions. Some analysts believe earnings could drop even further, potentially around 2021 EPS of $2.26.
Looking further out, Wall Street consensus has Tesla's EPS in 2025 coming in at $3.82, down from $5.29 at the end of 2023, according to FactSet.
However, with first-quarter deliveries out of the way, Tesla business is expected to pick up in the second quarter with increased Model 3 and Cybertruck sales in U.S. China sales could pick up from a seasonally slow Q1, though competition has intensified in the world's largest EV market.
Wall Street currently forecasts Q2 deliveries of 498,000 units.
Tesla Stock Has Plunged In 2024, But At Least It's Cheaper, Right? Nope
Tesla Stock Performance
Last week, Tesla stock advanced 2.9% to 175.79, booking a second consecutive weekly gain as the EV company started rolling out its latest Full Self-Driving (FSD) update to customers. TSLA shares are trading below the 50-day moving average.
Emails sent by Elon Musk leaked on social media platforms showing he is making it mandatory in North America to install and activate the latest version of FSD on vehicles and take customers on a "short test ride before handing over the car."
Tesla is also offering a one-month free trial of FSD in the U.S. for new purchases or existing EVs that are FSD capable.
On March 14, Tesla stock dropped more than 4%, hitting new 2024 lows and levels not seen since May 2023. TSLA fell around 13% in March and is the so far in 2024.
The EV giant ranks eighth in the 35-member IBD Auto Manufacturers industry group. The stock has a 31 Composite Rating out of a best-possible 99. Tesla stock also has a 10 Relative Strength Rating and a 67 EPS Rating.
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