With Tesla production and deliveries hitting records in Q2, the focus of investor concerns has narrowed to the potential for price cuts and their negative impact on margins. Yet there's some seeming good news on that front coming out of China. On Thursday, Tesla, BYD and a number of other Chinese automakers signed a pledge to steer clear of "abnormal pricing."
China Price Accord Doesn't Lift TSLA Stock
TSLA stock slipped more than 1% in early Thursday stock market action, after closing at a nine-month high on Wednesday.
EV demand has reaccelerated after a slowdown led to worries about a buildup in inventories. That hints that the price-cutting impetus may have passed, at least for now.
The question is whether the BYD agreement will limit Tesla's pricing flexibility when the market inevitably softens again. Tesla currently enjoys wider profit margins than its China-based rivals, so it might be better able to afford price cuts.
Nio and Xpeng were among other signatories to the pact arranged by the China Association of Automobile Manufacturers at the behest of Beijing's Ministry of Industry and Information Technology.
Other news out of China on Thursday appeared less positive for Tesla. The online publication CnEVPost reported that EV producers will receive roughly 40% fewer credits starting Aug. 1. The credits can be sold to producers of internal-combustion-engine vehicles to achieve regulatory compliance.
Tesla earned $521 million in Q1 from the sale of carbon-related credits, but it doesn't detail the amount earned by geography.
Cathie Wood's ARK Sells More TSLA
In other Tesla news, fund manager Cathie Wood and her ARK Invest Management sold more TSLA stock on Wednesday, continuing to trim holdings after the stock's recent gains.
ARK sold 28,267 shares from its ARK Next Generation Internet ETF, worth $8 million based on the day's 282.48 closing price. The fund added 5,486 Meta Platforms shares valued at $1.61 million.
Cathie Wood's funds are still a net-buyer of TSLA stock this year, with more than 1.3 million share purchases and 934,000 shares sold.
Meanwhile, the National Highway Traffic Safety Administration made public a July 3 letter sent to Tesla seeking updated responses and current data related to a probe of its Autopilot driver-assistance system. Answers are due by July 19.
TSLA Stock
TSLA stock slipped 1.6% to 278.02 in early Thursday trade. Tesla is well extended past a 207.79 buy point.
