Why Tesla stock sold off 7% today

This article was originally published on Fool.com. All figures quoted in US dollars unless otherwise stated.

red tesla on the road

This article was originally published on Fool.com. All figures quoted in US dollars unless otherwise stated.

What happened

In the midst of a down market, shares of EV leader Tesla (NASDAQ: TSLA) tumbled more than most, falling 7.2% through noon ET on Thursday after Reuters reported that Tesla is once again raising prices on its electric cars. 

Citing the rising cost of raw materials and continuing problems getting auto parts with which to build its cars efficiently, Reuters noted that Tesla has raised the price on its popular Model Y crossover by about 4.8%, to $65,990 for the “long-range” version.  

So what

Tesla isn’t stopping there, though. Digging into the details on Tesla’s website, Electrek reported last night that the prices are as follows:

  • The Model 3 Long Range price is up the most in percentage terms, rising 6.4% to $57,990.
  • The Model X Dual Motor All-Wheel Drive Long Range price increased 5.2% to $120,990.
  • The Model S Dual Motor All-Wheel Drive Long Range’s price rose a similar 5% to $104,990.
  • The Model Y Performance crossover inched up only 2.9% to $69,990.
  • “Plaid” versions of both the Model S and the Model X held steady at $135,990 and $138,990, respectively — no change in price.

Skimming the changes, there’s no discernible pattern to where Tesla is hiking prices more and where less. While “Plaid” pricing is already the highest for both the S and X and is not budging, Tesla’s other Model X doesn’t cost much less, yet its price was hiked significantly.

The biggest change in pricing came to the Model 3, and raising the price on Tesla’s entry-level EV may be a move to encourage customers to skip past the Model 3 and pay just a little more to get an even better, bigger car instead. Similarly, the price changes in the Model Y tighten the price differential between the lower-end and higher-end models — which might likewise be aimed at persuading shoppers to buy a little more car than they had intended.

Now what

To that extent, therefore, it almost seems as if raising prices might be good news for Tesla, and that investors who are selling the stock on today’s news are making a mistake — but for one thing.

Just two days ago, Elon Musk was quoted telling his audience at the Tesla Silicon Valley Owners Club that he thought electric rival Rivian (NASDAQ: RIVN) made a mistake when it tried to raise prices on its electric trucks and SUVs back in March. When you raise prices, commented Musk, you “reduce the number of people who can afford the vehicles exponentially,” as Electrek reported.  

If that’s true for Rivian, though, then shouldn’t it also be true for Tesla? By raising his own prices, doesn’t Musk run the risk of depressing demand for new Teslas — at the very moment when rivals such as Hyundai and Ford and GM — and yes, Rivian, too — are bringing new and occasionally cheaper alternative EV models to market?

Because if that’s the case, then it might be a good reason Tesla stock is going down today. 

This article was originally published on Fool.com. All figures quoted in US dollars unless otherwise stated.

The post Why Tesla stock sold off 7% today appeared first on The Motley Fool Australia.

Wondering where you should invest $1,000 right now?

When investing expert Scott Phillips has a stock tip, it can pay to listen. After all, the flagship Motley Fool Share Advisor newsletter he has run for over ten years has provided thousands of paying members with stock picks that have doubled, tripled or even more.* Scott just revealed what he believes could be the “five best ASX stocks” for investors to buy right now. These stocks are trading at near dirt-cheap prices and Scott thinks they could be great buys right now

See The 5 Stocks
*Returns as of January 12th 2022

(function() {
function setButtonColorDefaults(param, property, defaultValue) {
if( !param || !param.includes(‘#’)) {
var button = document.getElementsByClassName(“pitch-snippet”)[0].getElementsByClassName(“pitch-button”)[0];
button.style[property] = defaultValue;
}
}

setButtonColorDefaults(“#43B02A”, ‘background’, ‘#5FA85D’);
setButtonColorDefaults(“#43B02A”, ‘border-color’, ‘#43A24A’);
setButtonColorDefaults(“#fff”, ‘color’, ‘#fff’);
})()

More reading

Rich Smith has no position in any of the stocks mentioned. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. has positions in and has recommended Tesla. The Motley Fool Australia has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.

This article was originally published on Fool.com. All figures quoted in US dollars unless otherwise stated.

from The Motley Fool Australia https://ift.tt/mUjOciD

Leave a Reply

Fill in your details below or click an icon to log in:

WordPress.com Logo

You are commenting using your WordPress.com account. Log Out /  Change )

Twitter picture

You are commenting using your Twitter account. Log Out /  Change )

Facebook photo

You are commenting using your Facebook account. Log Out /  Change )

Connecting to %s