Price Reductions in US and China (05.27.20)
Tesla Daily: Tesla News & Analysis
Rob Maurer
4.8 • 1.1K Ratings
🗓️ 27 May 2020
⏱️ 7 minutes
🧾️ Download transcript
Summary
➤ Analyzing Tesla’s price reductions in the US and China
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Music by Evan Schaeffer
Disclosure: Rob Maurer is long TSLA stock & derivatives
Transcript
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| 0:00.0 | Hey, Rob Maower here and today I want to spend most of our time talking about the price cuts for Tessa vehicles that have happened over the last day. |
| 0:13.7 | I am recording during market hours but despite these price decreases, |
| 0:16.8 | Tesla stock has performed okay. |
| 0:18.7 | Right now as I'm recording it's only down 1.3% with the NASDAQ down about |
| 0:22.1 | seven-tenths of a percent and the |
| 0:23.9 | directionality has mostly followed the NASDAQ for the day so far. |
| 0:26.7 | To catch people up on the price changes if you haven't seen it yet, the biggest |
| 0:29.9 | price changes are in North America Tesla has reduced the price of all model S&X vehicles by 5,000. price United States. And then for Model S and Model X, previously those came with free unlimited |
| 0:44.3 | supercharging. That is no longer included. In China, Tesla has held the price of the |
| 0:48.9 | Made in China Model 3s, but they have reportedly reduced the price of the import model S and model X by about 4% and then for Europe there have been some price changes in some individual countries but for the most part Europe seems to be on impacted. |
| 1:01.5 | All right so the reason that I say it's a bit surprising that the stock |
| 1:04.0 | isn't down a little bit more today is because generally when we see these price cuts from |
| 1:07.6 | Tesla, the immediate reaction is, okay, Tesla has a demand issue, their cutting prices to stoke demand because of that issue. |
| 1:14.9 | That question in this case is exacerbated because we know for a month and a half Tesla's production |
| 1:19.2 | has been shut down in Fremont and of course the macro environment is kind of a mess right now. |
| 1:24.0 | So if Tesla is production constrained and they haven't been producing and they're still production |
| 1:27.7 | constrained why would they lower prices and with the macro environment being |
| 1:31.0 | poor it makes sense for them to drop, the price if demand is low. |
| 1:34.6 | Those are good questions to ask and I think the logic there makes sense, but I do think there's some nuance here |
| 1:39.0 | that is worth discussing. The first idea that I want to introduce is that demand is not a singular concept. |
| 1:44.8 | There are regional variations, there are seasonal variations, and then there are quarterly deadlines |
| 1:49.4 | that unfortunately need to be managed around. |
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