Tesla’s Bold Pricing Strategy Pays Off, Puts a Rocket Under the Stock Price
Key takeaways
- Tesla delivered a record-breaking 466,000 EVs in the second quarter, smashing analyst expectations
- The positive beat comes after CEO Elon Musk controversially slashed prices on key Tesla models in the U.S.
- The company’s share price was up 6.9% on Tuesday at the news
Anyone who doubted Elon Musk’s pricing strategy for Tesla needs to eat some humble pie. Tesla soared past its estimated sales for the quarter after slashing prices earlier this year in a bid to boost sales. While Wall Street loved the result, Tesla still faces competition in the East. Here’s the latest.
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What’s the latest with Tesla?
Tesla just posted its second quarter deliveries, hitting a record number of sales — 466,000, to be precise. That’s around 5% higher than what Wall Street analysts predicted and the company’s biggest delivery result since the last quarter of 2021.
The move comes after Elon Musk made the controversial move to slash the price of many popular Tesla models in the U.S. so customers could take advantage of EV tax credits. The announcement was met with skepticism at the time, with many questioning whether the move would hit Tesla’s bottom line, but the gamble has clearly paid off.
Tesla’s results now put serious pressure on other legacy carmakers, including General Motors and Ford, to increase EV production.
Wall Street’s reaction
Tesla enjoyed a hefty boost to its stock price on Tuesday, hitting a 6.9% increase to $279.82. Tesla shares have now increased 158% since the start of the year, having lost two-thirds of their value in 2022. Some of its success has been down to competitors like General Motors, Ford and Polestar adopting the Tesla Supercharger network in the U.S. and making Tesla’s EV charger design the de-facto standard.
But investors should be cautious about investing in individual stocks, especially Tesla. The stock has always been volatile, but Tesla faces stiff competition on the global market from Chinese EV companies like BYD. The carmaker also posted record sales in the second quarter, selling 700,000 EVs and hybrids, which dwarfs Tesla’a sales.
The bottom line
Call him eccentric or crazy, Elon Musk knows how to take a risk and make some big moves. Tesla’s pricing strategy has clearly paid off, with customers and investors loving the results. But whether Tesla can compete against the likes of BYD is another story that’s yet to be realized.
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