Tesla’s Tough Quarter Means Price Hikes, Job Cuts And Stalled Production In China

The Model Y, the electric-car maker's top seller, and versions of its other cars and SUVs are getting pricier in the wake of CEO Musk's warning of a " tough quarter."

The base version of the Model Y increased in price this week. Customers will spend more than $80,000 if you add a color other than Pearl White or Silver Metallic to the "full self driving" option. The Long Range version of the Model 3 went up by $2,500 to $57,990. The Model X SUV and Model S sedan went up in price.

It's not uncommon forTesla to change its vehicle pricing frequently. The costs of raw materials for batteries, aluminum, steel, as well as supplies of Semiconductor have created headaches for all automakers. The brand has a strong appeal to higher income consumers.

Ed Kim, president of industry researcher AutoPacific, says that Model Y, which had a base price of $63,000 until this week, sold 200,000 units last year. No other SUV at the same price points sells at those volumes. The company has been able to find large numbers of customers willing to spend a lot of money on their products.

The pricing moves come as the Austin, Texas-based company winds down a rocky second quarter in which Musk simultaneously moved to acquireTwitter, became openly politically partisan and announced plans to eliminate about 10% of the workforce. Two months ago, Musk predicted that the company would lose more production in China than it did.

The public health rules that were put in place to stop the spread of the coronaviruses caused the factory to be temporarily shut down at the beginning of April. The plant is expected to produce 115,300 units in the quarter, down from 178,887 in the first three months of the year. The company is ramping up production at new plants in Berlin and Austin, so it is not certain if the Chinese slowdown will result in a drop in revenue. It would be the first decline for the company since the third quarter.

The disruption from local Covid lockdowns is understandable, if not fully in consensus forecasts, given the high dependence ofTesla on China production. It can make up substantial lost ground with accelerated deliveries into the close of a quarter where disproportionate amounts of a full quarter's production can occur. It's possible that what may be lost in 2Q will provide a boost to 3Q results.

According to new data released by the National Highway Traffic Safety Administration this week, 70% of crashes involving cars and trucks equipped with partially automated driving features have been caused by cars and trucks with autopilot.

The company's shares have plummeted since March 31 due to recession concerns fanned by Musk in leaked memos. The fortune of Musk, the world's richest person, was cut in half by the fall of his company.

The average price of an electric vehicle in the US is $65,388, while the average transaction price is $47,148. The higher EV price already shows that the market is dominated byTesla.

Vehicle price is the top obstacle on the path to EV adoption. I don't think that applies toTesla buyers. The group is a unique one. They don't shop much. They don't really want a car.

Ford's Mach-E is priced from $43,895, the Ioniq 5 is from $39,990, and the EV6 is from $48,490. The three models qualify for a federal tax credit that is no longer given by the company as it surpasses the maximum of qualified vehicles. The company doesn't currently have a product that meets that requirement, so California customers don't get a perk as the company doesn't currently have a product that meets that requirement.

The lower EV production capacity and sales of its competitors will not impact the U.S. business in the near term.

As the EV market swells with new products from a variety of brands, it would be beneficial for Musk's team to start catering to the lower end of the market to positionTesla as a brand that's obtainable. When the EV becomes more mainstream, this will be important.

The price hikes were reported by Electrek.