Tesla’s Price Cuts Wreak Havoc on Share Prices

Tesla’s stock prices went down abruptly on Thursday morning, likely because of the few price decreases it had earlier this year. American consumers are not purchasing very expensive items nowadays due to inflation and some banks in the United States failed during Tesla’s first quarter.

Tesla’s sales went up in the last quarter, but they earned less money from each sale due to reductions in prices. As a result, Tesla’s profits decreased by 24%, as mentioned on Wednesday night. The following day, Tesla shares dropped 8%.

Jeffrey Osborne from TDCowen has concerns about Tesla’s plan to sell cars at lower prices but make up the profits with their “Full Self-Driving” technology. Jeffrey wonders if it will actually work on older vehicles without a lot of extra stuff added to them.

Tesla made $2.51 billion during the first 3 months of the year, which is less than the $3.32 billion they had earned in the same period a year earlier. However, their total sales went up by 24%, despite their profits shrinking.

CEO Elon Musk then mentioned that price cuts may not be done yet, as Tesla evaluates prices on a daily basis to make sure they can produce maximum vehicles possible. He also said that they have more orders than they can actually produce right now.

Tesla has reduced their prices four times in the US and once in Europe during the quarter. They made about 18,000 more cars than was sold, suggesting people are buying fewer of their products. Their quarterly income margins went down from 19.2% to 11.4%.

Tesla wants to sell their cars for less money so that they can make money from services like software and a special “Full Self-Driving” system that will turn the vehicles into robotic taxis, making them worth more. Even though it’s called “self-driving,” these cars still need someone in control all the time.

In 2019, Musk promised that self-driving cars would be available by 2020. He also said last year that the cars would become autonomous in 2022. During 2021, Tesla allowed owners to test out something called “Full Self-Driving” on public roads.

U.S safety regulators are taking a closer look at Tesla’s automated driving systems. They have been to more than 30 car accidents since 2016 in which Teslas that were on Autopilot or ‘Full Self-Driving’ have hit pedestrians, cyclists, trucks, and parked vehicles. Sadly, 14 people have lost their lives in these crashes.

The NHTSA in February made Tesla recall almost 363,000 vehicles with the “Full Self-Driving” software installed in them. The agency said that this system can sometimes do dangerous and illegal things like driving straight through an intersection even if it is designated as a turn-only lane or not stopping at yellow lights properly. This issue will be fixed by using an online software update.

The Justice Department is asking for information about two things related to Tesla’s cars: “Full Self-Driving” and Autopilot.