Tesla again cut prices in China on two Model Y vehicle trims and is offering an insurance subsidy for Model 3 buyers. The move shows EV price competition still intensifying, even amid increased speculation over the release of Tesla's revised Model 3. Meanwhile, Cathie Wood and her Ark Invest firm sold more than 100,000 shares of TSLA at the end of last week as Tesla stock continues to retreat.
The global EV giant announced Sunday prices in China for the Model Y Long Range and Performance variants have been reduced by RMB14,000 ($1,930). This represents about a 4% price cut, Tesla's third Model Y price trim in China. Tesla left prices for its base Model Y, the most popular variant in China, unchanged.
The Model Y faces several new crossover rivals from competitors BYD, Li Auto and XPeng.
Meanwhile, Tesla is also offering a limited-time insurance subsidy of RMB 8,000 ($1,110) for in-inventory Model 3 vehicles. The buyer-incentive for existing Model 3's comes as rumors are swirling that the updated Tesla Model 3, code-named Highland, is set for an imminent release in China.
Tesla has slashed prices worldwide multiple times in 2023, putting pressure on gross margins. In the second quarter, Tesla reported total gross margins came in at 18.2%, down from 19.3% in Q1 and a decline of 682 basis points vs. last year. Auto gross margins, excluding regulatory credits and leases, came in at 18.1%, down from 18.3% in Q1.
That is below the 20% gross margin "floor" Tesla previously targeted. Ahead of earnings, a slew of analysts rang warning bells on gross margins.
Tesla stock dropped 1.3% to 239.39 Monday during market trade. On Friday, TSLA shares shed more than 1%, closing at 242.65.
Tesla Stock
TSLA has been pulling back since second-quarter financials on July 19, as investor concerns over falling gross margins is outweighing the global EV giant's above-forecast earnings and revenue.
Tesla stock declined 4.4% to 242.65 last week. That move undercut support at the stock's 50-day, 10-week moving average, finishing Friday 6.7% below that technical level of support. Finishing the week more than 2% below the 10-week is a significant sell signal, according to IBD analysis.
Cathie Wood's ARK Investment Management sold 108,174 shares in consecutive sessions to close out last week. On Friday, Wood sold $7.7 million in Tesla stock, according to the company's daily trade disclosure. This followed Cathie Wood dumping more than 76,000 shares for about $18.75 million on Thursday.
Tesla stock sits on IBD Leaderboard and the IBD Big Cap 20. Tesla stock ranks third in IBD's automaker industry group. It has a 98 Composite Rating out of 99. Tesla has a 90 Relative Strength Rating and its EPS Rating is 94 out of 99.
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