Tesla shares saw a sharp decline in intraday trading after Chairman and CEO Elon Musk denied a report that the automaker canceled plans for a less expensive vehicle.
The stock fell 3.63% on Friday after Reuters said Tesla was abandoning the project, citing unnamed sources and company messages it had reviewed.
“Reuters is lying,” Mr. Musk wrote on X, his social media service.
Mr. Musk first hinted at a US$25,000 (nearly CAN$34,000) model during an event organized by the company in September 2020. The CEO then declared that a series of The innovations Tesla was working on allowed him to believe the company could produce an electric vehicle at that price within about three years.
More than three years later, the lack of a low-cost model in Tesla’s lineup is proving costly. Chinese company BYD, which offers several much cheaper electric vehicles, outsold the Austin company in the fourth quarter of last year. This week, Tesla announced its first decline in quarterly vehicle deliveries since the early days of the global pandemic.
During Tesla’s last earnings conference call in January, Mr. Musk said the company was “very far along” in designing a cheaper car, with production expected to begin late in the year. next year.
He also touted a “revolutionary new manufacturing system,” which he called “far more advanced than any automobile manufacturing system in the world, by a significant margin.”
Discounts on SUVs
Also Friday, Tesla announced it was reducing the price of the best-selling Model Y vehicle it has in stock, with the rear-wheel-drive version selling for US$4,600 less than the cost of a custom order of the vehicle. sport utility.
Tesla is offering these deals after producing 46,561 more vehicles than it delivered in the first quarter, adding more cars to its inventory than ever before. Although the company has attributed its decline in global sales in part to switching its California plant to build the upgraded Model 3 sedan and to the shutdown of its plant in Germany, some analysts are not buying it. not.
The difference between the number of vehicles Tesla built and sold during the quarter “dispels the notion that first-quarter deliveries were somehow limited by supply rather than demand,” wrote Ryan Brinkman, a analyst at JPMorgan Chase & Co. who has the equivalent of a sell rating on Tesla stock, in a report dated April 3.
Mr. Brinkman reduced his target price for the shares from US$130 to US$115 and lowered his estimates for first-quarter revenue and earnings per share. He now projects that Tesla will record a free cash outflow of US$1.3 billion, instead of an inflow of more than US$300 million, due to an expected record increase in finished goods inventories.
Tesla’s stock has fallen 31% this year, the second worst performer on the S&P 500 index.