EV pioneer Tesla (NASDAQ:TSLA) has introduced a Chinese-made Model 3 version that offers a longer range. This marks the first instance of a launch in China before the U.S. market for the company, according to Reuters.
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The restyled Model 3 is being produced at the EV maker’s Shanghai plant, and in addition to the Chinese market, it will also be exported to Asia, Europe, and the Middle East. Recently, the company has also slashed the prices of its Model S and Model X vehicles in both China and the U.S. by double-digit percentages.
These reduced prices for its premium offerings indicate ongoing competitive pressure for the company. Tesla has already started accepting orders for the new Model 3 and plans to initiate deliveries in the fourth quarter. The company is also expected to unveil the new version at the Munich Auto Show and anticipates beginning deliveries in Europe in late October.
Tesla aims to drive sales with the new, higher-priced Model 3. The company has seen its operating margin shrink by nearly 500 basis points in the second quarter, and a higher price tag could potentially help in improving its margin profile.
This higher price tag comes after a series of price cuts that Tesla undertook in major markets this year. Barclays analyst Dan Levy notes that these price cuts point to, ”A further increase in discounts already in place on inventory and add to questions on whether Q2 will prove to be the gross margin trough for Tesla.” The analyst expects further discounts from Tesla as the company pushes to drive volumes.
Overall, the Street has a consensus price target of $257.75 on Tesla, alongside a Hold consensus rating. Shares of the company have popped by nearly 25.5% over the past six months. Meanwhile, Levy has assigned the stock a Hold rating with a $260 price target.
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