The stock of electric vehicle giant Tesla (NASDAQ:TSLA) declined over 7% yesterday and another 2.2% in today’s pre-market training on lower China-made EV deliveries in February. According to data from the China Passenger Car Association (CPCA), TSLA delivered 60,365 vehicles last month, down 19% from February 2023 and 16% from the previous month. Moreover, it reflects the lowest shipment volume since December 2022.
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It is worth mentioning that lower sales come despite Tesla’s efforts to boost demand by reducing prices and offering incentives. The company’s performance was likely impacted by a slowdown during the Chinese Lunar New Year celebrations in February and heightened domestic competition.
Interestingly, similar downtrends were witnessed by the local EV players. Warren Buffet-backed BYD (BYDDY) delivered 122,311 vehicles in February, down over 39% from January and 36.8% year-over-year. In addition, Nio (NIO) and XPeng (XPEV) reported a 33.1% and 24.4% year-over-year drop in February sales, respectively.
Price War Continues
The slowdown in EV demand is likely to prompt the companies to continue engaging in price wars.
Both BYD and XPeng announced price cuts on Monday to boost sales amidst a challenging market environment. BYD disclosed an 11.8% price reduction in its updated Yuan Plus SUV, whereas XPeng extended a 20,000 yuan ($2,780) discount on its G6 SUV until the end of March.
Likewise, Tesla is offering some incentives to attract buyers. These price-cuts and incentives are expected to further impact the company’s profit margins and remain a key worry for investors.
Is Tesla a Buy or Sell?
Tesla stock has 11 Buy, 19 Hold, and five Sell recommendations for a Hold consensus rating. The average TSLA price target of $211.58 implies a upside of 12.5%. The stock has declined about 27% over the past six months.
