Tesla has slashed prices globally on its electric vehicles by as much as 20 percent, extending an aggressive discounting strategy and challenging rivals after missing Wall Street delivery estimates for 2022.
The move was announced after CEO Elon Musk warned that the prospect of a recession and higher interest rates meant the company could lower prices to sustain volume growth at the expense of profit.
Tesla shares were down 3.6 percent on Friday.
Musk acknowledged last year that prices had become “embarrassingly high” and could hurt demand.
The lower pricing across the United States, Europe, the Middle East and Africa following a series of cuts last week in Asia marked a reversal from the strategy the carmaker had pursued through much of 2021 and 2022 when new vehicle orders exceeded supply.
“Competition is coming and they are responding with price cuts,” said Thomas Hayes, chairman and managing member at Great Hill Capital.
The cuts may make electric cars affordable to people who may have been previously priced out of the market especially as buyers in the US and France will be eligible for certain government tax credits.
The US price cuts on its global top-sellers, the Model 3 sedan and Model Y crossover SUV, were between 6 percent and 20 percent, Reuters calculations showed, with the basic Model Y now costing $52,990, down from $65,990.
Tesla also cut prices on its Model X luxury crossover SUV and Model S sedan in the US.
For a US buyer of the long-range Model Y, the new Tesla price combined with the US subsidy amounts to a discount of 31 percent. In addition, the move broadened the vehicles in Tesla’s line-up eligible for a US federal tax credit of up to $7,500, which took effect on January 1.
Before the price cut, the five-seat version of the Model Y had been ineligible, which Musk called “messed-up”. After the price cut, the long-range version of the Model Y will qualify.
In France, customers buying the Model 3 for 44,990 euros ($48,570) will now get a further reduction through a government subsidy of 5,000 euros ($5,400) on an electric vehicle scheme with a threshold of 47,000 euros ($50,8580).
In Germany, it lopped from about 1 percent to almost 17 percent off prices on the Model 3 and the Model Y. The best-selling Model Y will now go for 44,890 euros ($48,499), down by 9,100 euros ($9,850). A reduction in cost inflation was also a factor in reducing prices in its top European market, a spokesperson for Tesla Germany said without specifying which costs had fallen.
It also reduced prices in Austria, Switzerland and France.
‘Shot across bow’
Shares fell as investors worried the move might erode bumper margins that the company had been earning, particularly as competition intensified, even if it were to boost sales volumes.
Wedbush analyst Dan Ives said the move could boost global deliveries by 12 to 15 percent this year and shows Musk is on the offensive.
“This is a clear shot across the bow at European automakers and US stalwarts [GM and Ford] that Tesla is not going to play nice in the sandbox with an EV price war now under way,” Ives said in a research note.
“Margins will get hit on this, but we like this strategic poker move by Musk and Tesla,” he wrote.
US carmakers General Motors Co and Ford Motor Co fell 4.9 percent and 6.1 percent, respectively, making them among the biggest losers on the broad-market S&P 500 Index, while in Europe, Stellantis NV fell 3.9 percent and Volkswagen AG dropped 2.8 percent.
‘Punch in the gut’
Tesla fans and customers complained the price cuts disadvantaged those who had recently bought a vehicle, leaving them with a lower second-hand value.
Greg Woodfill in Seattle, who bought a Model Y in December, had considered waiting until this year to get the US subsidy but was lured by a discount at the time of $3,750.
“It’s a punch in the gut, to be honest,” he told Reuters on Friday, adding that it feels unfair for Tesla to seek to boost its fourth-quarter sales with discounts, only to cut prices a month later.
“If they knew they would drop the price this much, they should have just done it in December,” he said.
In China, where Tesla cut prices last week by 6 to 13.5 percent, owners protested at delivery centres, calling for compensation.
For 2021, the US and China combined had accounted for about 75 percent of Tesla sales, but Europe’s sales share has been growing.
Tesla cut prices in China and other Asian markets last week, which analysts had said would boost demand and increase pressure on rivals, including BYD, to follow suit in what could become a price war in the largest single electric car market.
CALGARY – TC Energy Corp. has lowered the estimated cost of its Southeast Gateway pipeline project in Mexico.
It says it now expects the project to cost between US$3.9 billion and US$4.1 billion compared with its original estimate of US$4.5 billion.
The change came as the company reported a third-quarter profit attributable to common shareholders of C$1.46 billion or $1.40 per share compared with a loss of C$197 million or 19 cents per share in the same quarter last year.
Revenue for the quarter ended Sept. 30 totalled C$4.08 billion, up from C$3.94 billion in the third quarter of 2023.
TC Energy says its comparable earnings for its latest quarter amounted to C$1.03 per share compared with C$1.00 per share a year earlier.
The average analyst estimate had been for a profit of 95 cents per share, according to LSEG Data & Analytics.
This report by The Canadian Press was first published Nov. 7, 2024.
BCE Inc. reported a loss in its latest quarter as it recorded $2.11 billion in asset impairment charges, mainly related to Bell Media’s TV and radio properties.
The company says its net loss attributable to common shareholders amounted to $1.24 billion or $1.36 per share for the quarter ended Sept. 30 compared with a profit of $640 million or 70 cents per share a year earlier.
On an adjusted basis, BCE says it earned 75 cents per share in its latest quarter compared with an adjusted profit of 81 cents per share in the same quarter last year.
“Bell’s results for the third quarter demonstrate that we are disciplined in our pursuit of profitable growth in an intensely competitive environment,” BCE chief executive Mirko Bibic said in a statement.
“Our focus this quarter, and throughout 2024, has been to attract higher-margin subscribers and reduce costs to help offset short-term revenue impacts from sustained competitive pricing pressures, slow economic growth and a media advertising market that is in transition.”
Operating revenue for the quarter totalled $5.97 billion, down from $6.08 billion in its third quarter of 2023.
BCE also said it now expects its revenue for 2024 to fall about 1.5 per cent compared with earlier guidance for an increase of zero to four per cent.
The company says the change comes as it faces lower-than-anticipated wireless product revenue and sustained pressure on wireless prices.
BCE added 33,111 net postpaid mobile phone subscribers, down 76.8 per cent from the same period last year, which was the company’s second-best performance on the metric since 2010.
It says the drop was driven by higher customer churn — a measure of subscribers who cancelled their service — amid greater competitive activity and promotional offer intensity. BCE’s monthly churn rate for the category was 1.28 per cent, up from 1.1 per cent during its previous third quarter.
The company also saw 11.6 per cent fewer gross subscriber activations “due to more targeted promotional offers and mobile device discounting compared to last year.”
Bell’s wireless mobile phone average revenue per user was $58.26, down 3.4 per cent from $60.28 in the third quarter of the prior year.
This report by The Canadian Press was first published Nov. 7, 2024.
TORONTO – Canada Goose Holdings Inc. trimmed its financial guidance as it reported its second-quarter revenue fell compared with a year ago.
The luxury clothing company says revenue for the quarter ended Sept. 29 totalled $267.8 million, down from $281.1 million in the same quarter last year.
Net income attributable to shareholders amounted to $5.4 million or six cents per diluted share, up from $3.9 million or four cents per diluted share a year earlier.
On an adjusted basis, Canada Goose says it earned five cents per diluted share in its latest quarter compared with an adjusted profit of 16 cents per diluted share a year earlier.
In its outlook, Canada Goose says it now expects total revenue for its full financial year to show a low-single-digit percentage decrease to low-single-digit percentage increase compared with earlier guidance for a low-single-digit increase.
It also says it now expects its adjusted net income per diluted share to show a mid-single-digit percentage increase compared with earlier guidance for a percentage increase in the mid-teens.
This report by The Canadian Press was first published Nov. 7, 2024.
