On Oct. 6, 2023, Tesla cut prices for its Model 3 sedan by 2.7% and the Model Y SUV by 4.2%. This is in response to weak demand. Before that, the firm posted weak deliveries.
Tesla reported production of 430,488 vehicles and 435,059 deliveries during the third quarter. Volumes declined sequentially because of factory upgrades. In effect, the volume miss is not a negative development for long-term shareholders. Factory updates will improve quality and efficiency. Conversely, second-place firms like GM (GM), Rivian (RIVN), and Ford (F) continue to lose money.
Tesla has a significant lead on demand advantages and low supply costs. Margins will rise after it cuts prices. It will encourage EV buyers to pick Tesla’s model first and foremost. After the cost for each unit of production fell steadily this year, Tesla should report higher profitability.
TSLA stock will likely outperform its peers. Firms that started selling vehicles have a mountain of headwinds to overcome. Fisker (FSR) is targeting the budget market which will increase its costs. Rivian must contend with Tesla’s Cyber truck next. And Lucid (LCID) faces competition from Tesla’s Model S and Plaid editions.
Tesla is a stock to consider for growth investors.