Is the Tesla trend about to lose power forever?
Is the Tesla trend about to lose power forever?
Elon Musk’s Tesla is making headlines once again with its recent announcement of significant price increases for all vehicle models in Canada. This move has raised eyebrows among consumers and investors alike, prompting discussions about the implications for Tesla's future and its stock performance.
Tesla's Q4 2024 earnings reportTesla's latest earnings report showed a mixed performance. The company reported an earnings per share (EPS) of $0.73 (USD), which was below the expected $0.76. Revenue came in at $25.7 billion, falling short of the anticipated $27.61 billion. This indicates a slowdown compared to previous periods. And with vehicle deliveries falling 22,000 units short of the forecasted 517,000, we could be seeing early signs of a forming long-term bearish trend.
Behind the price increasesBy raising the price of the Tesla models, the company’s net profitability should, in theory, rise. Such a key change in the market dynamic could inspire investors to reap the rewards, but before you hit the TSLA buy button, consider the bigger picture.
Effective February 1, 2025, Tesla will implement price hikes of up to C$9,000 (approximately $6,200 USD) for the Model 3, while the Model Y, S, and X will see increases of up to C$4,000 each. This decision has the potential to affect consumer demand significantly, but not in a good way.
In 2023 and 2024, Tesla sold around 45,000 vehicles to Canada alone. Is that number about to fall? With prices already at a premium, these increases may push some models out of reach for middle-income buyers, especially in a price-sensitive market like Canada. The previous price adjustments disqualified some models from federal EV rebates, and the new hikes could further alienate potential buyers who might turn to more affordable alternatives.
Such price hikes can create negative sentiment among potential buyers who may feel that Tesla is becoming less accessible. If market sentiment perceives this with a negative tone, big investors may pull out of TSLA in favor of other investments that better align with Trump’s policies and goals of a self-sufficient America.
Then there are Tesla’s reliability issues, computer glitches, and explosive battery incidents that have been surfacing since the EV introduction in 2008. It appears that Tesla cars might not stand up to the test of time, making Tesla cars a risky investment… which might eventually translate to the stock–if there are no technological leaps around the corner.
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