Tesla Shares Fall After $2,000 Price Reduction On Vehicle Lineup
The price cut is an effort to compensate for lower green tax credits.
Tesla Inc., the Silicon Valley electric automaker, recently saw a 9% drop in its shares. This drop of Tesla shares is the result of fears over subsequent financial profits for the company after it reduced prices on its entire vehicle lineup in the United States. The price cut is an effort to compensate for lower green tax credits.
At the same time, Tesla also fell short of its quarterly delivery goal of the Model 3 Sedan, causing business analysts to wonder whether the decreased prices were a consequence of reduced demand for Tesla vehicles, and the way they would affect the company’s profits.
A $2,000 decrease in Tesla Model 3, Model S and Model X, announced on 2nd January came as a shock to investors and buyers alike. The share value for Tesla immediately dropped by 9.4 percent during the morning trading itself. This price reduction also took place amid automakers worries that 2019 would not be profitable because of predicted low vehicle sales and increased competition in the electric vehicle market.
Regardless of delivering on his promise to increase company profits in the third quarter of 2018, Tesla CEO Elon Musk is under increased stress from investors for the steady development of the Model 3 Sedan. This is a surefire way to attain long-term profits for the electric automaker and improve Tesla shares position in the stock exchange. Currently, Tesla is developing around 1,000 Model 3s daily; however, the production rate needs to be a bit higher to meet the Wall Street forecast. Tesla expects to start delivery of the Model 3 to Europe and China in February 2019.