Tesla Inc.’s overnight price cuts suggest the coronavirus is putting a bigger damper on demand than has been reflected in the electric-car maker’s share price, two analysts said.
The $5,000 reductions for the Model S and X and $2,000 cut for the Model 3 were an “acknowledgment that Tesla isn’t immune to material North American demand weakness,” Craig Irwin, an analyst at Roth Capital Partners, said in a report Wednesday.
“With the stock trading in the stratosphere,” Roth wrote, “the key question is, ‘Can Tesla continue to deliver an interesting growth rate in the U.S.?’”
Credit Suisse’s Dan Levy said the discounts change the narrative around the company’s volume this quarter. Prior to the price cuts, investors were concerned that demand would be limited by tight inventory. The company shut down production at its lone U.S. auto plant on March 23 and rushed to reopen the facility — initially without local authorities’ permission — in mid May.
Tesla shares fell 1 percent to $810.79 in midday trading on Wall Street.