On Friday, electric vehicle (EV) maker Tesla (NASDAQ:TSLA) commenced the sale of its Model Y rear-wheel drive sport utility vehicles (SUVs) in South Korea at a price of 56.99 million won (about $44,000). The Model Y is available for delivery between August and September.
Tesla’s Lower-Priced Model in South Korea
According to local media outlets, Tesla Model Y cars for the South Korean market were produced in China, with a tweet by Tesla Korea showing a video of cars being manufactured in the Shanghai Gigafactory. The Shanghai Gigafactory not only produces EVs for Chinese customers but also serves as an export hub for the company.
The pricing of the vehicle below 57 million won makes the buyer eligible for subsidies of up to 8.6 million won. According to a Bloomberg report, the price of the rear-wheel drive Model Y drops to about $37,000 after accounting for government subsidies. It could go as low as $30,000 in certain cities that offer additional incentives for EVs.
The report highlighted that earlier versions of Model Ys in Korea were priced at $80,000 (dual motor performance) and $62,000 (long-range versions). The Korean market offers solid growth opportunities for Tesla. Clean vehicles (battery-powered, hybrid, and hydrogen vehicles) accounted for about 6.2% of cars in the country in 2022, indicating that there is a lot of scope for further growth for EVs.
Q2 Performance
Earlier this month, Tesla reported better-than-anticipated overall deliveries and production numbers for the second quarter of 2023. The Elon Musk-led EV maker’s deliveries jumped 83% to 466,140 units compared to the prior-year quarter and reflected more than 10% quarter-over-quarter growth. The company produced 479,700 EVs. Tesla’s aggressive price cuts helped boost demand, although there have been concerns about the lower prices impacting the company’s margins.
Tesla is scheduled to announce its Q2 results on July 19. Analysts expect the company’s EPS to rise 4% year-over-year to $0.79. Ahead of the results, Citigroup analyst Itay Michaeli raised his price target for Tesla to $278 from $215 but maintained a Hold rating. Michaeli sees the Q2 earnings scenario “as a neutral-to-slightly negative mainly on valuation, but in the absence of imminent downward estimate revisions we don’t see a de-rating catalyst either.”
Is Tesla a Good Stock to Buy Now?
Of the 18 Top Wall Street Analysts covering Tesla, eight have a Buy rating, nine have a Hold recommendation, while one rates it a Sell. Given the 126% year-to-date rally, the average price target of $240.41 implies a possible downside of 13.5%.
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