Tesla's $2,000 price cut doesn't mean it has a demand problem (TSLA)

Tesla's $2,000 price cut doesn't mean it has a demand problem (TSLA)
Matthew DeBord/BI

Tesla cut prices on its vehicles by $2,000, setting off worries that it has a demand problem.

But based on how few vehicles it has in inventory and how many Model 3s it sold in 2018, demand concerns are overblown.

Tesla shares have been declining this week — but Tesla's stock has always been volatile.

Tesla announced fourth-quarter and full-year vehicle sales on Wednesday. They were a bit lighter than some analysts' projections, but the company still delivered close to 250,000 cars in 2018 — a milestone, and a miracle of sorts, given how much trouble the new Model 3 sedan caused as it made it way through what CEO Elon Musk termed "production hell."
The stock swooned, but that might have been due more to worries about demand for Tesla vehicles going forward, as the company also cut prices by $2,000 to make up for an expiring federal tax credit of $7,500 per car (it was chopped in half after Tesla sold 200,000 qualifying vehicles).
As I pointed out on Wednesday, a $2,000 Tesla price cut is roughly 50% below what the rest of the auto industry is offering, on average, to sell cars in the US right now; the GMs and Fords just call it an "incentive."
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