Tesla CEO Elon Musk had said that the company would lower car prices if inflation comes down. The tweet comes barely a month after the company hiked prices across all its US models.

In June, Tesla increased the price of its Model 3 Long Range by $2,500 to $57,990 and Model Y Long Range by $3,000. Together, Model 3 and Model Y account for most of the company’s deliveries.

It also increased the price of its dual-motor all-wheel drive Long Range Model S by $5,000 to $104,990. The price for the Plaid model, which has a higher range and was launched in 2021, has been kept at $135,990 only. Notably, the company raised car prices several times in 2021 also as soaring prices of inputs like steel, aluminum, nickel, and cobalt raised the manufacturing costs for all electric vehicle companies.

However, the June price hike came as somewhat surprising to the markets. While US inflation has been rising and hit a new pandemic high of 9.1% last month, commodity prices have fallen.

Tesla produced 258,580 cars in the second quarter of 2022. Since the first half of 2020, when COVID-19 lockdowns in China and the US, led to cutbacks in Tesla’s production, the company has been delivering a record number of cars every quarter.

The second quarter of 2022 was the first time in two years when Tesla’s production fell on a quarterly basis. It however tried to calm nerves by saying that the June production was a new record. Markets would next watch the company’s earnings release which is scheduled for later this month.

Tesla to Report Second Quarter Earnings

Markets would watch the impact of China’s lockdowns when Tesla reports its earnings. The Shanghai Gigafactory is believed to be the company’s most productive and profitable plant. Also, the company’s commentary on 2022 production guidance would be in focus.

The second quarter earnings season has been mixed so far. JPMorgan spooked markets with its commentary on the economy yesterday. It also suspended its stock buyback. The next major earning would be from Netflix which has recently announced a partnership with Microsoft for its ad-supported version. Netflix is the worst performing FAANG stock this year as investors have been wary of the streaming giant amid slowing growth.

Coming back to Tesla, which has held the crown of the world’s largest EV company for a long, lost the title to Chinese company BYD Motors. BYD, which is backed by Warren Buffett’s Berkshire Hathaway, reported a four-fold rise in deliveries in the first half of 2022 and delivered 641,350 new energy vehicles which were far ahead of the 564,743 that Tesla delivered.

Some Analysts Find Tesla Stock as a Buy

Wall Street has been always divided on Tesla stock and we see wide dispersion in its target prices. However, the stock got a bullish rating as Truist initiated Tesla as a buy on Wednesday. Truist analyst William Stein said, “We believe the company’s best days, in terms of volume production, product innovation, and, especially AI innovations, are still down the road.”

Musk believes that the company’s software capabilities, which include the Autopilot and the yet-to-be-launched Robotaxis would drive the stock higher. Earlier this year, the company raised the price for its FSD (full self-driving) by $2,000. However, the FSD has not struck the right chord with the US transport regulator which has opposed the nomenclature calling it misleading.

Musk has recently been in controversy after he backed out of the deal to acquire Twitter. The social media company has sued Musk to complete the acquisition.

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