Bernstein analysts reflected on the new price cuts that Tesla (NASDAQ:TSLA) implemented in the U.S.
The price of the Model S Long Range (LR) has notably decreased by $50,000 since November 2022, representing a significant drop of 37%.
“We note that Model S/X have accounted for 8% of automotive sales YTD, pointing to an incremental 150 bps headwind to automotive GMs going forward, all else equal,” the analysts said in a client note.
In contrast to the price reductions for the Model S and Model X, prices for the Model 3 and Model Y have remained relatively stable during the quarter, they added. Lead times for these models have also been stable.
Bernstein analysts also noted that Tesla has been selling units from its inventory at discounted prices, typically offering discounts of $3,000 to $5,000 for the Model 3 and Model Y. This translates to an additional discount of 6% to 10% off the list price.
An increasing percentage of units, possibly ranging from 25% to 40%, are being sold from inventory, which, according to the analysts, points to a potential incremental headwind of ~1% to 2% to ASPs (average selling prices).
“The upshot is that TSLA's reported ASPs this quarter could be down sequentially more than the -1.3% we have (and the -0.7% consensus has) modeled. We continue to worry that Tesla will need to further lower prices this year and/or next year to achieve its volume targets, incrementally pressuring margins,” the analysts further noted.
They also weighed in on the YTD rally in TSLA stock, which took place “despite a margin miss, continued demand weakness, and downward revisions to numbers.”
“We struggle to justify the rally on fundamental terms, as it is unclear margins have bottomed or that fundamentals are getting better. While market perception of Tesla as an AI company as well as Tesla's NACS standard becoming a de facto standard in North America could be helping sentiment, we see neither as financially material for Tesla,” the analysts concluded.
Tesla shares fell 1.8% yesterday and are down a further 1.7% in premarket NY trading.