Shares of France-based Renault, whose finance chief said the company will not drastically cut prices on its EVs amid Tesla’s downward “spiral”, were down by 7.6 percent, while Germany’s Volkswagen fell 3.5 percent. Shares of US automakers – ranging from Ford Motor Co to startups such as Lucid Group – fell between 3.3 percent and 4.4 percent. However, this does not come without pain as we now believe margins will get worse before they get better,” Tom Narayan, an analyst at RBC, said. “Long-term we believe this is the right strategy and leverages their cost leadership position. Investors dumped automakers from Europe to the US on fears that margins will be sacrificed for maintaining share in a slowing market. “We’ve taken a view that pushing for higher volumes and a larger fleet is the right choice here versus a lower volume and a higher margin,” he said. Tesla has already slashed prices six times this year and Musk suggested more such moves ahead, saying the company will put sales growth ahead of profit in a weak economy. A higher gross margin means a company retains more capital, which it can then use to pay for other costs or service its debt. Tesla stock plunged 9 percent on Friday after a bizarre podcast in which CEO Elon Musk smoked weed and sipped whiskey, and two high-profile executives abruptly announced they were leaving. Tesla’s automotive gross margin, excluding regulatory credits and leasing, stood at 18.3 percent, missing the above 20 percent target provided in January by Tesla’s Chief Financial Officer Zachary Kirkhorn. Tesla’s gross profit margins fell in the first quarter to the lowest in more than two years, missing market estimates, after the company kicked off a global price war in January to defend its dominance in the United States and make inroads in China, its second-largest market. “Facing a volatile macroeconomic backdrop and weakening demand, Tesla continues to prioritize units over near-term profits,” analysts at Canaccord Genuity said. That would put Tesla’s value below that of Meta Platforms for the first time since 2021. At least 15 analysts lowered their price targets on Tesla, whose market value was on track to drop by $50bn to about $517bn, if losses hold. The stock was trading at $163, dragging down other automakers. Last month, the agency started probing a car crash in April that killed three people and involved a 2022 Tesla Model S potentially running on autopilot, and in December, it launched an investigation into 580,000 Tesla vehicles sold since 2017 over features that allow drivers to play games on the front-center touchscreen while a vehicle is running.Tesla’s shares sank by nearly 10 percent on Thursday after Chief Executive Elon Musk signalled the electric vehicle maker will keep cutting prices to drive up demand even after taking a big hit to margins. The NHTSA has opened multiple investigations into Tesla over separate safety-related issues, many involving the potential use of the carmaker’s autopilot feature. Tesla has plunged 41% this year, while the tech-heavy Nasdaq is down 24%. Meanwhile, investor concerns over Musk’s offer to take Twitter private and supply-chain constraints have also dragged sentiment down. Shares of Tesla have racked up big losses since Musk suggested he would sell about 10% of his stake in November, with prices only collapsing further as the broader market struggles in the face of rising interest rates. Surprising FactĮven though its stock has struggled, Tesla reported its most profitable quarter in company history last month, posting $3.3 billion in first-quarter income fueled by record deliveries. Also on Friday, Cowen analyst Jeffrey Osborne lowered his price target on Tesla shares to $700 from $790, saying he expects the company will face challenges in achieving its production targets for the second quarter given the impact of Covid lockdowns in China that stunted production at Tesla’s Shanghai facility in March and April.
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