- REAL TIME CURATION
- of financial feeds, Wall Street research, communities, and social media -
- by traders for traders;
- MARKET COMMENTARY:
- Real time alerts on important factors which will affect or are affecting the market including technical factors and floor imbalances;
- ACTIONABLE CONTEXT:
- If applicable, within seconds and minutes, utilizing our real time database of accumulated Wall Street research;
Tesla Set to Deliver Model 3 to China Buyers in March Despite Price Cuts
| 01/07/2019
Tesla Inc. (TSLA.O) has revealed earlier today that it will begin the delivery of its Model 3 cars to customers in China in March. This latest development tallies with the timeframe that the chief executive of the company Elon Musk tweeted about towards the end of last year.
Model 3 Price Cuts might not Affect TSLA Price Negatively
The cut in the price ofModel 3 cars might not affect the price of the company’s stock. In October2013, iPhone maker Apple Inc. (AAPL.O) made a similar move and slashed theprice of Apple’s iPhone 8 by up to a fifth so as to attract more customersfollowing sluggish demand for the phone in China.
Even though it was temporary, Apple was able to sustain massive growth in China in the third quarter of the year. Following the announcement by Apple, the price of AAPL surged from $216.80 to trade at $218.09. The reduction in the price of Model 3 cars might also lead to an increase in demand for the car and this could help boost the price of the stock.
Model 3 to be sold at $72,000
The California-based firm had earlier made plan to accelerate the sales of its cars in China but has been affected by the trade tension between Washington and Beijing. In their statement, the company stated the starting price for a Model 3 in China had been set at 499,000 yuan ($72,000).
The price mentioned above isn’t the original price for the Model Car. The company has to cut the price last month, making it the third time in two months that Tesla had to adjust prices in China due to the ongoing trade tension.
Tesla made a similar move for its Model X and Model S prices in China as they were slashed by 12 to 26 percent back in November.
Tesla looking to open a plant in Shanghai
Tesla has also opened a tender process as it seeks permission to build a $2 billion plant in Shanghai called a Gigafactory. A report by Reuters last month revealed that one of the contractors set to work on the project has started purchasing materials.
Tesla announced that it is planning to start by manufacturing roughly 3,000 Model 3 vehicles per week at the plant while also localizing both the manufacturing and the supply chain. The factor which is Tesla’s first in China is a big bet for the company as it looks to become a leading player in the automobile market. It is, however, facing tough, and increasing competition from companies in China as its earnings have been negatively affected by the increased tariffs on U.S. imports.
The Q4 report released by the company yesterday saw them reveal that they have missed expectations for deliveries and will be cutting its vehicle prices by $2,000 in the US. Even though it delivered 90,700 vehicles in the three months to December, it now has a total of 7,000 Model 3 cars unsold.
The quarterly report led to the shares of drop over the past 24 hours, and the announcement that it has cut the price for the Model 3 cars to be delivered to China will most likely hit the stock even harder. TSLA is currently trading at $300.36, having lost 9 points so far today.