Tesla Inc. (TSLA.O) shares fell more than 6.8% on Thursday as CEO Elon Musk indicated the electric-vehicle maker would keep cutting prices to boost demand even after incurring a huge margin blow.
At least 15 analysts cut Tesla price targets, sending the stock to $168.25. Losses could cost the corporation $50 billion in market value.
“Facing a volatile macroeconomic backdrop and weakening demand, Tesla continues to prioritize units over near-term profits,” said Canaccord Genuity analysts.
After starting a price battle in January to maintain its U.S. dominance and expand into China, its second-largest market, Tesla’s first-quarter gross margins fell to a more than two-year low and missed market projections.
Musk indicated additional such moves, saying the company, which has lowered prices six times this year, will prioritize sales growth over profit in a sluggish economy.
Investors dumped automakers from Europe to the U.S. out of fear that margins would be lost to maintain dominance in a market slowing this year due to economic uncertainties.
Long-term, Tesla’s price decreases are the appropriate plan and leverage its cost leadership position. However, “This is not without pain as we now believe margins will get worse before they get better,” RBC analyst Tom Narayan said.
Ford Motor Co (F.N.) and Lucid Group Inc (LCID.O) declined from 3.3% to 4.4%.
Renault SA (RENA.PA), whose finance director warned the business will not substantially decrease E.V. costs amid Tesla’s “spiral,” slumped 7.6%, while Volkswagen (VOWG_p.DE) dropped 3.5%.