Tesla (TSLA) Slashes Model Y Price on Coronavirus Crisis

Tesla, Inc. TSLA has slashed the cost of its Model Y SUV by $3,000, as a result of the dwindling auto demand over weeks of lockdown that has now begun to ease.

Per the company’s website, the Model Y will now be sold at $49,990 following similar price cuts to other vehicles in Tesla’s range this May. The electric-car maker had been charging $52,990 since beginning of Model Y deliveries in March. The firm reported its new model was already profitable in April, marking the first time that such a landmark had been hit for one of its vehicles in the very first quarter of production.

Notably, in May, Tesla cut prices of its electric vehicles by around 6% in North America, as the firm restarted production at the Fremont plant. Model S sedans were priced at $74,990, down from $79,990. Its Model X sport utility vehicles (SUVs) was priced at $79,990, from $84,990, and the cheapest Model 3 sedan was made $2,000 cheaper, priced at $37,990. Moreover, Tesla introduced price cuts in China in the same month, after price adjustments in the United States. It slashed prices for the Model S and Model X it imports by around 4%, but kept the prices of locally-made Model 3 cars unchanged.

Despite the pandemic-led crisis, Tesla posted a smaller-than-expected in production volume in the second quarter. It registered production and deliveries of 82,272 and 90,650 vehicles, respectively, in the June-end quarter, marking a year-over-year decline of 4.8% for both.

In June, Tesla was facing major production issues with Model Y, thus consumers in the United States were reluctant to purchase the battery-electric SUV and in some cases, refusing deliveries as well. The defects reportedly cover a variety of areas, including paint and trim issues, seat indentations and a loose seat belt.

Meanwhile, robust production levels from the new Gigafactory in Shanghai bode well for Tesla’s growth. The Shanghai factory is ramping up well and commands a higher market share in the Chinese EV market. The plant is operating at full capacity, and will keep generating solid revenues. Accelerated production from Gigafactory 4 in Berlin will also add to the top line.

Zacks Rank and Stocks to Consider

Tesla currently carries a Zacks Rank #3 (Hold). Shares of the company have appreciated 257.8%, year to date, compared with the industry’s rise of 80.5%.

Some better-ranked stocks are Niu Technologies NIU, LCI Industries LCII and Brilliance China Automotive Holdings Ltd. Unsponsored ADR BCAUY, each carrying a Zack Rank of 2 (Buy) at present. You can see the complete list of today’s Zacks #1 (Strong Buy) Rank stocks here.

Shares of Niu have surged 148.4%, year to date, as against the industry’s decline of 11.3%.

Shares of LCI Industries have appreciated 1.6%, year to date, as against the industry’s decline of 11.2%.

Shares of Brilliance have rallied 9.3%, year to date, as against the industry’s decline of 11.3%.

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Tesla, Inc. (TSLA) : Free Stock Analysis Report
 
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