A seasoned Tesla Inc bear and CEO of GLJ Research, Gordon Johnson, has raised the alarm, pondering whether the recent announcements of impending price increases for Tesla vehicles in the U.S. and Europe foreshadow a significant cutback in production, akin to what was observed in China.
Exploring the Ramifications: “Is $TSLA raising prices (in the US/China/etc.) to offset planned lower production – i.e., which means higher COGS/unit as fixed costs are absorbed over a smaller base?” Johnson tweeted, addressing Tesla’s CEO Elon Musk. “In simpler terms, is $TSLA on the path to becoming just another run-of-the-mill auto company after all?”
Warnings of Price Escalations: Recent reports indicated that Tesla is set to raise the prices of its China-produced Model Y vehicles by 5,000 yuan ($694) starting April. These increases follow similar alerts issued by the company regarding upcoming price adjustments in the U.S. and Europe.
Back in March, Tesla announced a hike in the price of its popular SUV in multiple European countries to commence on March 22, with an increment of about 2000 euros ($2163). While in the U.S., the starting prices for all Model Y variants are expected to rise by $1000 starting April 1.
Reduced Production in China: Recent reports by Bloomberg revealed that Tesla has directed staff at its Shanghai gigafactory to scale back production of the Model Y and Model 3 electric vehicles.
Unlike Johnson, who sees a direct correlation between the price hikes and production cuts, Tesla bull Ross Gerber interprets this as a China-specific measure by the company.
“There’s no way around it; cutting production in China. The Chinese economic downturn is definitely impacting several companies, and Tesla is no exception,” remarked Gerber, the president and CEO of Gerber Kawasaki Wealth and Investment Management.
Market Performance: Tesla’s shares concluded Friday’s trading session down by 1.15% at $170.83. Year-to-date, the stock has dipped by 31.23%, based on data from Benzinga Pro.
For more insights on Benzinga’s Future Of Mobility coverage, click here.
Further reading: Facebook Isn’t Lame For Musk Anymore? Tesla Rejoins Zuckerberg’s Social Media Platform After Ghosting It For 6 Years
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