Electric vehicle (EV) titan Tesla (NASDAQ:TSLA) continues to be in the spotlight. In the latest development, Reuters reported that the automaker plans to partially stop production at its factory near Berlin between January 29 and February 11. This decision is attributed to supply chain disruptions caused by the component shortage as a consequence of attacks on vessels in the Red Sea that led to a shift in transport routes.
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In other news, Bloomberg reported that Tesla is adjusting its pricing strategy for locally manufactured models in China to drive volumes amid slowing demand. The company’s Model 3 sedan will see a price reduction of 5.9%. Simultaneously, the starting price of the Model Y sport utility vehicle was cut by 2.8% to 258,900 Yuan.
Notably, Tesla consistently lowered its prices throughout 2023 to push volumes amid soft demand due to the high interest rate environment and growing competition, especially from BYD (BYDDY) in China. The company’s strategy to lower prices and increase volumes took a toll on its margins. Tesla’s operating margins fell 964 basis points year-over-year in Q3 2023. Further, its operating margins have consistently decreased sequentially in 2023.
Is Tesla Stock Expected to Rise?
While Tesla’s margins remained under pressure, its stock jumped nearly 84% over the past year due to solid deliveries. Tesla’s vehicle deliveries increased 38% year-over-year to 1.81 million in 2023. However, the stock saw a tough start to 2024 and has lost about 9% of its value year-to-date.
Tesla stock sports a Hold consensus rating, reflecting 12 Buy, 13 Hold, and five Sell recommendations. Analysts’ average price target of $249.92 implies 9.99% upside potential from current levels.
