Twitter could be bigger than Elon Musk’s problem. Tesla is reducing prices to move inventory. Investors get nervous.

Tesla offers a $7500 credit for all Model 3 and Model Y cars that are delivered before the end.
Price cuts for Tesla are “not a positive sign,” Wedbush analyst Dan Ives stated. This comes as Tesla’s stock has been in freefall and inventories have piled up.

The latest sign that Tesla is in trouble is its doubling of monthly discounts on its most-loved vehicles.

Tesla is splurging on holiday deals while the rest of automotive industry holds off on discounting for the third consecutive season. Analysts believe that this is a sign that Tesla is struggling to maintain its inventory as demand cools for its all-electric cars.

Dan Ives, an analyst at Wedbush Securities, stated in an email that “the price cuts are not good signs for the holiday season.”

Tesla advertised on Thursday a $7500 credit for all Model 3 or Model Y vehicles that were delivered before the end. This is a doubling the credit of $3,750 offered earlier in the month. Tesla’s discounts are rare, as it had previously instituted price increases in recent years due to supply chain disruptions, inflation, and other factors.

As Tesla increased production and customers demanded its vehicles, Tesla has long refused to accept traditional auto industry discounts. Musk’s electric vehicle maker enjoys an advantage as the US’s only seller of all-electric cars in recent years.

In 2022, there were more competitors to the market, both from startups like Rivian, Tesla, and legacy car makers like Ford, GM, and Hyundai. Many first-time EV purchasers are now considering other brands instead of Tesla, even without the $7.500 federal tax credit that Tesla lost in late 2019.

Tesla vehicles may be eligible for tax credits once again under the new rules set out in the huge climate bill. However, the US Treasury Department delayed enforcement of the new requirements until March by moving them back to March. This means that potential Tesla buyers who had been waiting until January might not have to wait for spring.

Analysts are also concerned that Musk’s gaffes as CEO and Twitter owner could be a threat to the Tesla brand. In the past few weeks, some reservation-holders have tweeted about their cancellations.

All this comes on top a falling stock price. Some disgruntled Tesla shareholders worry that the EV company is operating without a CEO, while Musk focuses his attention on Twitter.

Ives sent an email stating that a “very negative spiral” was occurring on the Tesla story.

Business Insider has the original article.
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By: nnaughton@insider.com (Nora Naughton)
Title: Elon Musk may have a bigger problem than Twitter as Tesla slashes prices to offload inventory and investors get nervous
Sourced From: www.businessinsider.com/elon-musk-twitter-tesla-slash-prices-inventory-investors-2022-12
Published Date: Thu, 22 Dec 2022 19:15:51 +0000