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Key Takeaways
- Tesla shares dropped more than 3% ahead of the opening bell Monday after the EV maker announced price reductions in the U.S. and other key markets, including China and Germany.
- The price reductions come at a time when the company faces sluggish EV demand, increasing competition from rivals, and a plethora of company-specific challenges.
- Tesla shares are likely to find significant buying interest near the January 2023 swing low at $101.81, which sits in close proximity to the key psychological $100 level.
Tesla (TSLA) shares fell more than 3% in premarket trading Monday after the legacy electric-vehicle (EV) maker followed up a round of U.S. price reductions announced on Friday with discounts on a range of models in other key markets, including in China and Germany, as the company aims to boost demand amid heightened competition.
On Friday, Tesla shaved $2,000 off the price tag of its Model Y, Model X, and Model S vehicles in the U.S., while reducing the price of its Full Self-Driving driver-assistance software to $8,000 from $12,000.
In China, the EV maker reduced the price of its Model 3 by 14,000 yuan to 231,900 yuan, roughly $32,000, according to the company’s website on Sunday. Meanwhile, the company slashed the price of its rear-wheel-drive Model 3 in Germany to 40,990 euros, approximately $43,670, from 42,990 euros. A company spokesperson told Reuters that the carmaker has also cut prices on some of its vehicles in other countries in Europe, the Middle East, and Africa.
The price drops come after CEO Elon Musk recently posted on X that he had postponed his highly anticipated trip to India due to heavy Tesla obligations. During the visit, Musk was expected to meet Prime Minister Narendra Modi and unveil plans for the automaker to enter the South Asian market. “Unfortunately, very heavy Tesla obligations require that the visit to India be delayed, but I do very much look forward to visiting later this year,” he said.
Through Friday’s close, Tesla stock had fallen 41% so far this year amid tepid EV demand, cutthroat competition from Chinese rivals and a range of company-specific challenges, including declining deliveries, excess inventories, a Cybertruck recall, analysts downgrades, and scrutiny over Musk’s $56 billion pay package. Investors will eagerly be awaiting updates on these issues and others when the automaker reports its first-quarter 2024 earnings after the close on Tuesday.
Taking a looking at Tesla weekly chart, the 50-day moving average crossed below the 200-day moving average last month to form a death cross, an ominous chart pattern that indicates a downward trend. Indeed, the price closed last week below the lower trendline of a descending channel, opening the door for further declines leading into the company’s earnings release on Tuesday.
However, if selling pressure continues in the weeks ahead, investors should keep a close eye on the January 2023 swing low at $101.81, an area on the chart that would likely attract significant buying interest, especially given the region sits in close proximity to the psychological $100 level.
Tesla shares were down 3.1% at $142.48 at around 6:45 a.m. ET.
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