Tesla Inc. (TSLA) is said to cut prices of its electric vehicles by as much as 6% in North America in response to the downturn in auto demand in the area amid the lockdown orders tied to the coronavirus pandemic.
According to Reuters, Tesla lowered prices for the Models S, 3, and X in North America as its Fremont factory in California recently resumed production. In China, Tesla will cut the price for its Models S and X by about 4%.
The vehicle maker also said its Supercharger quick-charging service will no longer be free to new customers of its Model S sedans and Model X sport utility vehicles (SUVs).
Tesla last week was given a green light to resume production at its main Fremont auto plant ending a stand-off between the electric automaker and Alameda County over safety measures.
According to Tesla website’s the starting price for its Model S sedan is now $74,990, down from $79,990. Its Model X SUVs is now priced at $79,990, from $84,990, and the lowest-priced Model 3 sedan is $2,000 cheaper at $37,990.
U.S. auto retail sales likely halved in April from a year earlier, according to data from J.D. Power. However, May sales are poised to be better due to pent-up demand and incentives offered by many carmakers, the analytics firm said.
As the coronavirus pandemic put many people out of their jobs, while also having a dampening impact on economic growth, automakers from General Motors Co to Ford Motor Co and Fiat Chrysler Automobiles NV are offering 0% financing rates and deferred payment options for new purchases.
The value of Tesla shares has more than doubled over the past two months. The stock was little changed at $818.87 as of Tuesday’s close.
Last week, four-star analyst Joseph Osha at JMP Securities lowered the stock’s price target to $1,001 from $1,020, while keeping a Buy rating, saying that he doesn’t expect the Fremont production capacity to return to pre-COVID output seen this year.
Osha still forecasts Tesla’s 2021 deliveries at 445K for Model 3 and 207K for Model Y, adding that it is hard to see how the automaker won’t manage to grow 26% per year from its 2019 rate.
TipRanks data shows that Wall Street analysts take a more cautious stance on the company’s stock. Overall, it has a Hold consensus based on 9 Sells, 9 Holds, and 8 Buys. Following stock’s recent rally, the Street’s $623.45 average price target implies 24% downside potential in the shares over the coming year. (See Tesla’s stock analysis on TipRanks).
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