Home News Tesla Stock in Spotlight After Price Cuts on Several Model Y Vehicles: Key Levels to Watch

Tesla Stock in Spotlight After Price Cuts on Several Model Y Vehicles: Key Levels to Watch

by SuperiorInvest

Key takeaways

  • Tesla shares are in the spotlight after the electric vehicle maker temporarily reduced the price of several of its popular Model Y vehicles by $1,000 until the end of February in the United States.
  • The U.S. automaker cut prices to increase deliveries over the past year amid a slowdown in demand for electric vehicles and growing competition from Chinese electric car makers.
  • Tesla stock has swung within a seven-month descending channel, with the pattern's upper trendline and key moving averages providing potential chart resistance between $225 and $233.

Tesla, Inc.

Source: TradingView.com.

Telsa (TSLA) stock may change course on Monday after the Texas-based electric vehicle (EV) maker announced a temporary price cut through its website for several Model Y cars in the U.S. until the end of February.

The pioneering electric vehicle company has shaved $1,000 off its popular Model Y rear-drive and Model Y long-range vehicles, dropping their respective prices to $42,990 and $47,990, representing about a 2% reduction in each price. previous.

“Pricing Update: New Model Y RWD and Long Range AWD prices are reduced for deliveries now through February 29,” the company’s website reads, adding that “prices will increase by $1,000 or more on March 1.”

Interestingly, the price change does not apply to the automaker's top-of-the-line Model Y Performance, which comes with a price tag of over $50,000. The price drop announced over the weekend comes after Tesla slashed Model Y prices in Germany last month following difficulties in sourcing components caused by disruptions to shipping in the Red Sea.

Over the past year, the automaker has stepped up price reductions to counter slowing consumer demand for electric vehicles and growing competition from Chinese electric car makers. China's BYD Auto Co., Ltd. (BYDDF) continues to advance Tesla's market share in lower-priced electric vehicles, recently overtaking the American automaker to become the world's top electric vehicle maker by the end of 2023. The latest price cuts will continue to pressure Tesla's operating margin, which shrank to 8.2% in the December quarter as the company focuses on deliveries to boost sales.

Tesla stock has oscillated within a descending channel for the past seven months, aside from a breakout of the bullish trap in mid-December. More recently, buyers have defended the pattern's lower trendline, around $175, although trading volume has remained slightly below average. Looking ahead, it's worth keeping an eye on how the price responds to the upper and lower boundaries of the channel for clues about the stock's next move. Note that the channel's upper trendline also roughly aligns with the 50-day and 200-day moving averages which may provide additional resistance around the $225 to $233 region on the chart.

Tesla shares ended Friday's session at $193.57. As of the end of last week, the stock had lost 22% of its value since the beginning of the year.

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As of the date of writing this article, the author does not hold any of the above securities.

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