Analysts say plan doesn’t suggest a position of strength
Wall Street reacted nervously on Friday to Tesla Inc’s move to shut its network of high-end showrooms and launch a long-awaited cheaper version of its Model 3 sedan, as shares fell 8 per cent and most analysts expressed concern over the company’s long-term margins.
“Taken in conjunction with the introduction of the $35k Model 3, we view this as confirmation that demand for Tesla vehicles has softened,” RBC Capital Markets analyst Joseph Spak wrote in a client note. The company attributed the potential loss to one-time charges and said it would likely be profitable in the second quarter.In its annual report released last month, Tesla said it “had established and continue to grow a global network of stores…”
The lower price could expand the Model 3 market by about 600,000 cars in the United States alone, based on historical sales figures for similarly priced sedans, Baird analyst Ben Kalo wrote in a note to clients.
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