Share

Tesla reduces prices on Models S and X amid stock slump

Share

DETROIT (AP) — Tesla has reduced the prices of its two most expensive models, raising concerns about fading interest in its cars and whether the company can generate enough cash to pay all the bills.

On Monday, Tesla cut $3,000 from the price of the Model S sedan and $2,000 from the Model X SUV.

The company said in a statement that it periodically adjusts prices and available options like other car companies. The decreases offset price increases from a month ago when Tesla offered longer battery range and added a new drive system and suspension. The statement didn’t say if slowing sales influenced the decision.

The moves come as Tesla’s stock is under pressure from investors who are becoming skeptical of CEO Elon Musk’s ability to turn a profit and keep the business growing, all while balancing demands of developing a self-driving ride system and building new products such as a small SUV, a pickup truck, a new roadster and an electric semi.

“The business fundamentals of Tesla always have been shaky, but the stock price has been buoyed by the story that this is a company that was going to do huge things,” said Navigant Research analyst Sam Abuelsamid. “What we’ve seen in the last month or so is people are starting to recognize maybe that wasn’t really true.”

Trending:
Prince Harry Named in Major Sex Trafficking Lawsuit Against Rapper

The Palo Alto, California, company, which had been growing sales until this year, has run into trouble while trying to make the transition from a niche producer of luxury electric vehicles to a mass-market automaker. In order to control costs to bring down the price of its less-expensive Model 3, it’s been forced to go through two rounds of layoffs and close some of its stores.

Musk told employees that expenses are being reviewed since the company went on a “Spartan diet” after losing $702.1 million in the first quarter. All of this came after Tesla had difficulties producing the Model 3.

And Musk’s own behavior has been questionable at times. He’s run afoul of the Securities and Exchange Commission for posting important company information on Twitter. Last year, he was seen appearing to smoke marijuana during an interview. He berated stock market analysts for asking questions about Tesla’s finances and was sued after calling a diver who helped rescue a Thai youth soccer team from a flooded cave a pedophile.

Tesla shares closed Tuesday down slightly at $205.08. They have fallen more than 38% so far this year, cutting the company’s market value more than $20 billion to $36.5 billion.

With the price cuts, the Model S now starts at $71,250 while the X starts at $71,950. Both prices don’t include federal and state tax credits.

Tesla said in a statement that the reductions are about 2% to 3% on the S and X. The company last week raised the price of its top-selling Model 3 by $400, pushing the base price to $35,400.

“By any reasonable standard, these small changes are not newsworthy,” the company said in a statement.

Last quarter was among the worst for Tesla in the past two years. Sales tumbled 31% in the period. Musk predicted another loss in the second quarter but said Tesla would be profitable again by the third quarter.

In January, the automaker cut its prices by $2,000 per vehicle, acknowledging that the pending expiration of a $7,500 federal tax credit for its electric cars will hurt sales. The credit is gradually being phased out for Tesla by the end of the year.

The Western Journal has not reviewed this Associated Press story prior to publication. Therefore, it may contain editorial bias or may in some other way not meet our normal editorial standards. It is provided to our readers as a service from The Western Journal.

Truth and Accuracy

Submit a Correction →



We are committed to truth and accuracy in all of our journalism. Read our editorial standards.

Tags:
Share
The Associated Press is an independent, not-for-profit news cooperative headquartered in New York City. Their teams in over 100 countries tell the world’s stories, from breaking news to investigative reporting. They provide content and services to help engage audiences worldwide, working with companies of all types, from broadcasters to brands. Photo credit: @AP on Twitter
The Associated Press was the first private sector organization in the U.S. to operate on a national scale. Over the past 170 years, they have been first to inform the world of many of history's most important moments, from the assassination of Abraham Lincoln and the bombing of Pearl Harbor to the fall of the Shah of Iran and the death of Pope John Paul.

Today, they operate in 263 locations in more than 100 countries relaying breaking news, covering war and conflict and producing enterprise reports that tell the world's stories.
Location
New York City




Conversation