Tesla stock hits a sell signal as electric car giant cuts China prices; The main investor is Decorations Holding

Tesla (TSLA) once again lowered prices in China on two Model Y car models and offers insurance subsidies to Model 3 buyers. The move shows that competition for electric car prices remains fierce, even amid mounting speculation about the release of Tesla’s revised Model 3. .


The global EV giant announced Sunday that prices in China for the Model Y Long Range and performance variants have been slashed by CNY14,000 ($1,930). This marks a price cut of nearly 4%, and is Tesla’s third Model Y price cut in China. Tesla left pricing for its base Model Y, the most popular variant in China, unchanged.

The Model Y faces several new crossover competitors BYD (I will), Lee Otto (L.I) And XPeng (XPEV).

Meanwhile, Tesla also offers a limited-time insurance subsidy of CNY 8,000 (US$1,110) for Model 3 vehicles in stock. Buyer incentive for the current Model 3 comes with rumors circulating that an updated Tesla Model 3, codenamed Highland, is set for an imminent release in China.

Tesla has cut prices around the world several times in 2023, adding pressure to gross margins. In the second quarter, Tesla reported gross margins of 18.2%, down from 19.3% in the first quarter and a 682 basis point decline year-over-year. Gross margins for automobiles, excluding regulatory approvals and leases, posted 18.1%, down from 18.3% in the first quarter.

That’s less than the 20% gross margin that Tesla previously targeted. Before the earnings, a slew of analysts rang warning bells on gross margins.

Tesla stock fell 1.3% to 239.39 in Monday’s market trading. And on Friday, TSLA shares fell more than 1%, closing at 242.65.

Tesla stock

TSLA has slumped since its second-quarter financials on July 19, as investor concerns about declining gross margins outweighed the global electric car giant’s earnings and revenues above expectations.

Tesla stock fell 4.4% to 242.65 last week. This move undermined support at the stock’s 50-day and 10-week moving average, ending Friday 6.7% below this technical level of support. Ending the week more than 2% below 10-week is an important sell signal, according to IBD Analysis.

Cathie Wood’s ARK Investment Management sold 108,174 shares in consecutive sessions to close last week. On Friday, Wood sold $7.7 million in Tesla shares, according to the company’s daily business disclosure. This came on the heels of Cathy Wood dumping more than 76,000 shares for $18.75 million on Thursday.

Tesla stock sitting on IBD Leaderboard and the IBD Big Cap 20. Tesla stock ranks third in IBD Automotive Group. It has a composite rating of 98 out of 99. Tesla has a 90 relative strength rating and its EPS rating is 94 out of 99.

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