Tesla Earnings Excel but Margin Eroding Price Cuts Fuels Investor Profit Taking

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    Market reaction to Tesla earnings driving continued rebound in the mega cap space, in turn bolstering the broader market.
    $TSLA 158.80 ▲ +14.37 (+9.95%)
    Vanguard Mega Cap ETF $MGK 188.79 ▲ +2.68 (+1.44%)
    S&P 500 Index $SPX 4,051.48 ▲ +35.26 (+0.88%)


    Tesla offers NEW $3,000 discount or free Supercharging for three years.
    – Deal requires a trade-in.
    – Offer expires in February.

    Earlier Ford Motor Company announced would cut the price of their electric Mustang Mach E models in reaction to $TSLA #EV


    Tesla Recalls Roughly 362,800 Vehicles to Fix ‘Full-Self Driving’ Beta Software

    Tesla Inc. is issuing a recall for roughly 362,800 vehicles equipped with its advanced-driver assistance system that the company markets as Full Self-Driving beta, federal safety regulators said.

    In a notice published Thursday, the National Highway Traffic Safety Administration said that some Teslas in rare circumstances could violate local traffic laws, potentially increasing the risk of a collision if a driver fails to intervene.



    Ahead: #Tesla Investor Day today

    Where CEO Elon Musk is expected to announce third master plan “generation 3 platform” anticipated to lead to cheaper Electric Vehicle in the future, unclear if a new mass-market model will be unveiled


    Moody’s assigns Baa3 issuer rating to #Tesla; outlook stable
    $TSLA 197.58 ▲ +14.33 (+7.82%) today


    On Friday, the automaker cut prices on all US models, with Model 3 and Model Y sticker prices sliding by at least $1,000 while Model S and Model X prices fell by $5,000 or more.

    Bernstein analyst Toni Sacconaghi indicated that the price cuts were not surprising given elevated inventory levels, “but the timing and details (early in the quarter; in the US price; including the Model Y)” caught him off guard.

    “We believe additional price cuts in other geographies are likely,” he told clients. “The fact that Tesla is cutting price on its longest lead time model suggests other price cuts are likely to follow, particularly since Model 3 SR rebates will fall $3750 on 4/18, and competition continues to intensify. Make no mistake – the price cuts reflect Tesla’s need to stimulate demand and are an explicit trade off of margins for volume.”

    As such, he does not see a bottom for margins in the near term and will “undermine industry profitability” as other automakers are forced to match Tesla’s actions. Assessing the overall auto industry, Sacconaghi said that “incumbents are deep pocketed and not likely to back down” in the face of Tesla’s price cuts.

    “Some investors maintain that Tesla’s recent price cuts reflect a structural cost advantage that will enable it to pressure rivals and capture outsize volume and dominate the EV market,” he acknowledged. “Ultimately, we believe that the automotive market is hyper-competitive, and very difficult for any OEM to sustain an ongoing competitive cost advantage.”

    Sacconaghi assigned the stock an Underperform rating and a $150 price target on Tesla (TSLA).


    Wells Fargo analyst Colin Langan meanwhile maintained a Hold-equivalent rating as margins are expected to remain under pressure. He forecast Q1 margins of 17%, missing the consensus expectation of over 20% growth.

    “The price cut drove record Q1 deliveries, but TSLA needs higher deliveries to hit its 2M target,” Langan wrote. “This implies a risk of more price cuts, without at least a major refresh. Competition in China has increased, and some EU models in inventory were reportedly reduced mid-quarter.”


    Electric-car maker #Tesla jumped 4.6% to $234.86, its 10th straight session of gains.

    $TSLA’s longest winning streak since an 11-session run that ended in January 2021 via Dow Jones Market Data.
    – Collaboration with $GM on EV connector design


    GM will adopt Tesla’s charge-port hardware on future models

    General Motors said its future electric vehicles will use the same charging hardware as Tesla, a move aimed at giving GM owners more access to charging and further endorsing Tesla’s charging-port technology as the industry standard.

    GM said Thursday that Tesla agreed to give GM customers access to 12,000 of Tesla’s fast chargers, known as Superchargers, starting next year. Those GM customers will need an adapter to use the chargers, because the GM vehicles use a different charge port.

    Starting in 2025, GM will start making EVs with the Tesla charge port instead. GM Chief Executive Mary Barra said that giving the company’s customers access to Superchargers will accelerate EV adoption and that switching to the Tesla charge port on future models “could help move the industry toward a single North American charging standard.”

    The deal is similar to one Ford Motor and Tesla outlined last month, under which Ford’s customers will be able to use more than 12,000 Superchargers. Ford also said it would adopt the same charging hardware that Tesla uses when the Dearborn, Mich., automaker begins introducing a new line of EVs in about two years.

    For Tesla, it also comes with upside, potentially generating additional revenue for its Supercharger business, which is still relatively small but growing as it is opened up to more non-Tesla drivers.

    During a live chat with Tesla CEO Elon Musk on Twitter Thursday, Barra lauded the design and reliability of the charging hardware used on Tesla models. “We have a real opportunity here to really drive this to be the unified standard for North America.”

    Musk said GM owners would get equal access to Superchargers. “It really will be an even playing field,” he said. “I think people should be comfortable buying a Tesla or a GM, and we will provide support equally.”

    GM shares rose about 3% in after-hours trading Thursday, while Tesla’s stock price was up 3.5%. Ford shares surged in the wake of its Supercharger deal with Tesla, and analysts said the access to Tesla’s network was a win for Ford.

    Tesla’s Supercharger network, which includes more than 17,700 fast chargers in the U.S. at more than 1,650 locations, is widely regarded as the most reliable in an industry where finding operable charging equipment can be difficult.

    Tesla said earlier this year that it planned to open its Supercharger network to non-Tesla owners, a move expected to qualify the company for a share of billions of federal dollars earmarked for the build-out of a national network of EV chargers. GM is the second automaker to make a deal to tap in to Tesla’s network, following Ford.

    EVs on the market today come with a variety of charge ports—much like cellphones—which can complicate owners’ efforts to find the right charger. GM, Ford and many other automakers use a charging port called Combined Charging System, or CCS.

    The decision by the two Detroit automakers to migrate to Tesla’s charging technology, known as the North American Charging Standard, or NACS, is a strong endorsement for cementing that standard more broadly across the industry.



    Tesla reported Q2 earnings after the market close Wednesday beat EPS and revenue expectations with record vehicle deliveries and moderating raw materi
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