According to the news report by CNBC, Tesla Inc. has cut down the sale prices of the two most expensive electric car models – the Model S sedan and the Model X SUV. The company reduced the price of the Model S by $3,000 and the Model X’s price by $2,000 on Monday, May 20.
These price cuts come just a month after the company raised its prices after it offered its customers models with higher battery range, a new drive system and a new suspension system.
The company announced that it periodically made adjustments to its prices as well as product offerings, just like other auto companies did. The company did not specify whether its declining sales had influenced its decision to cut prices.
However, this statement did not appease investors, who had raised concerns about whether consumer interest in Tesla’s products was waning. Added to this concern was an even question of whether the electric car maker would be able to generate enough money to stay afloat.
Tesla’s stocks are also declining as investors have become more skeptical of Chief Executive Officer Elon Musk’s ability to turn the business around, ensure growth and also balance the demands of developing an autonomous driving system, making new products such as a pickup truck, a mini SUV, an electric semi and a new roadster.
Sam Abuelsamid, analyst at Navigant Research, stated that Tesla’s business fundamentals had always been shaky, but the company’s stocks had so far been pushed up by a belief that it was going to do big things. However, in the last month or more, investors have begun to realize that maybe that wasn’t going to happen.
Tesla had been seeing rising sales till the start of 2019. However, it has been struggling to move from being a niche producer of luxury electric cars to a mass-market electric car maker.
To be able to bring down costs, the company has already had to carry out two rounds of job lay-offs. It was also had to close down many of its stores across the US.
After recording $70.1 million in losses in the first quarter of 2019, Musk was forced to tell employees that expenses needed to be reviewed. All this happened due to the company not being able to mass-produce its Model 3. Q1 of 2019 was the worst quarter the company has seen in the last 2 years. In that time, car sales fell 31%. Musk said that he was expecting the second quarter to also see losses, but by the third quarter the company would be profitable again.
It hadn’t helped that Musk’s own behavior had led to investors questions his ability to lead the company to success. He was fined by the US SEC (Securities and Exchange Commission) because he posted important information about Tesla on Twitter.
Then, later in the year, he appeared on an interview and was seen smoking marijuana. He also railed against Wall Street analysts for questioning the state of the company’s finances. He was also sued for calling a diver a pedophile. That diver had been responsible for the rescue of a youth soccer team from a flood in Thailand.
Fortune reported two days ago that a market analyst who had once been one of Tesla’s most ardent supporters called the problems the company was facing a code red situation.
So far, the company’s stocks have fallen 38% year-to-date. On Tuesday, Tesla’s shares closed down at $205.08. This marks the 9th day in a row that the electric car maker’s stocks have declined. The company’s market value has also fallen by over $20 billion in the same time period and now sits at $36.5 billion.