The Telegram (St. John's)

Tesla shares tumble on price cuts

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Tesla tumbled four per cent on Monday, as its latest global price cuts fanned Wall Street concerns about dwindling margins at the electric-vehicle maker in the run-up to its earnings report later this week.

The company slashed prices by up to US$2,000 on its vehicles such as the Model 3 and Model Y in several markets including the U.S., China and Germany over the weekend, in its latest effort to boost demand slowed by high interest rates.

The cuts come ahead of its quarterly earnings on Tuesday, with the world’s most valuable automaker expected to post its first revenue drop and lowest gross margin in nearly four years, according to LSEG data.

Investors are awaiting clarity from CEO Elon Musk on Tesla’s strategy after he cut 10 per cent of the company’s staff last week and said focusing on autonomous driving was a “blindingly obvious” move.

Musk had earlier this month announced an event in August to unveil its “Robotaxi,” after a Reuters report on April 5 said Tesla had scrapped its plan to develop its longawaite­d affordable EV in favour of robotaxis. Musk said after the report that “Reuters is lying,” without citing any inaccuraci­es.

Wedbush Securities analyst Dan Ives wrote in a preview note last week that the earnings would be a “moment of truth” and “one of the most important moments in the company’s history.”

Tesla shares were down at $141.1 on Monday. The shares have lost about 41 per cent of their value so far this year with surveys and experts saying Musk’s tilt toward right-wing politics and polarizing public statements turned away some prospectiv­e buyers of its cars.

Monday’s drop was set to erase about nearly $20 billion from its market value of $468 billion, based on its total outstandin­g shares.

While Tesla remains the world’s most valuable automaker, Toyota has slowly been narrowing the gap on the back of a boom in demand for its hybrid vehicles.

The Japanese automaker had a market capitaliza­tion of $306 billion, as of its last close.

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