Tesla Inc. (TSLA) has been making headlines recently with announcements of upcoming price hikes on its vehicles in the U.S. and Europe. This has raised questions among analysts and investors about the company’s production volumes and strategy moving forward.
Gordon Johnson, CEO of GLJ Research and a long-time Tesla bear, took to Twitter to question whether the price hikes are a signal that production volumes will be slashed, similar to what happened in China recently. He asked, “Is Tesla raising prices to offset planned lower production – i.e., which means higher costs per unit as fixed costs are absorbed over a smaller base? Stated differently, is Tesla simply an also-ran auto company after all?”
Earlier this month, it was reported that Tesla would increase the prices of China-produced Model Y vehicles by 5,000 yuan ($694) starting in April. Similar warnings of impending price hikes were issued by the company in the U.S. and Europe, with the company looking to increase the starting price on all its Model Y variants by $1,000 in the U.S. starting April 1.
In addition to the price hike warnings, Bloomberg reported that Tesla has instructed employees at its gigafactory in Shanghai to reduce production of Model Y and Model 3 EVs. While Johnson sees these actions as interconnected and a sign of trouble for the company, Tesla bull Ross Gerber believes it is a China-specific action in response to economic challenges in the region.
Tesla’s stock closed down 1.15% on Friday at $170.83, and it has dipped 31.23% year-to-date. The company’s future production volumes and pricing strategy will be closely watched by analysts and investors in the coming months.
As Tesla navigates these challenges, it remains to be seen how the company will adapt and whether its stock price will rebound in the future. Investors will be keeping a close eye on any further announcements from the electric vehicle maker as it continues to compete in the rapidly evolving automotive industry.
