Tesla Discontinues Model S and X Production: Strategic Shift Explained
Written by Emily J. Thompson, Senior Investment Analyst
Updated: 1 hour ago
0mins
Should l Buy TSLA?
Source: Fool
- Declining Sales: Tesla's Model S and X deliveries totaled only 12,881 units in Q4, significantly lower than the 323,800 units for Model 3 and Y, indicating that high-priced models lack market competitiveness, prompting a strategic shift towards more popular lower-cost models.
- Future Strategy: CEO Elon Musk stated that Tesla is moving towards an autonomous future, and discontinuing high-priced models is a strategic decision to redirect resources towards the more promising autonomous taxi, Cybercab, aligning with changing market demands.
- Capital Expenditure Plans: Tesla plans to invest $20 billion by 2026, repurposing space at its Fremont factory previously used for S and X production to manufacture the Optimus robot, demonstrating the company's focus on future technologies and a shift in investment direction.
- Market Trends: As demand for lower-cost electric vehicles rises, Tesla's decision to discontinue Model S and X reflects broader industry trends, positioning the company to enhance its competitiveness in the electric vehicle sector by adapting to market changes.
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Analyst Views on TSLA
Wall Street analysts forecast TSLA stock price to fall
30 Analyst Rating
12 Buy
11 Hold
7 Sell
Hold
Current: 411.710
Low
25.28
Averages
401.93
High
600.00
Current: 411.710
Low
25.28
Averages
401.93
High
600.00
About TSLA
Tesla, Inc. designs, develops, manufactures, sells and leases high-performance fully electric vehicles and energy generation and storage systems, and offers services related to its products. Its segments include automotive, and energy generation and storage. The automotive segment includes the design, development, manufacturing, sales and leasing of high-performance fully electric vehicles, and sales of automotive regulatory credits. It also includes sales of used vehicles, non-warranty maintenance services and collisions, part sales, paid supercharging, insurance services revenue and retail merchandise sales. The energy generation and storage segment include the design, manufacture, installation, sales and leasing of solar energy generation and energy storage products and related services and sales of solar energy systems incentives. Its consumer vehicles include the Model 3, Y, S, X and Cybertruck. Its lithium-ion battery energy storage products include Powerwall and Megapack.
About the author
Emily J. Thompson
Emily J. Thompson, a Chartered Financial Analyst (CFA) with 12 years in investment research, graduated with honors from the Wharton School. Specializing in industrial and technology stocks, she provides in-depth analysis for Intellectia’s earnings and market brief reports.
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- Future Strategy: CEO Elon Musk stated that Tesla is moving towards an autonomous future, and discontinuing high-priced models is a strategic decision to redirect resources towards the more promising autonomous taxi, Cybercab, aligning with changing market demands.
- Capital Expenditure Plans: Tesla plans to invest $20 billion by 2026, repurposing space at its Fremont factory previously used for S and X production to manufacture the Optimus robot, demonstrating the company's focus on future technologies and a shift in investment direction.
- Market Trends: As demand for lower-cost electric vehicles rises, Tesla's decision to discontinue Model S and X reflects broader industry trends, positioning the company to enhance its competitiveness in the electric vehicle sector by adapting to market changes.
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- Technical Details Revealed: The FCC noted that Tesla's wireless charging system operates at low power for short durations and will not interfere with other systems, ensuring safety and effectiveness during the charging process, thereby increasing consumer confidence in the new technology.
- Cybercab Production Plans: Tesla's Cybercab is set to begin production in April at a price of $30,000, and the integration of wireless charging technology may attract more consumer interest, further driving sales growth.
- FSD System Milestone: Tesla's Full Self-Driving (FSD) system has driven over 8.2 billion miles, with over 3 billion miles in urban conditions, showcasing the technology's extensive application potential despite some safety concerns.
See More
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- New Model Launch: Tesla has opened U.S. orders for its Cybertruck priced at $59,990, which, while lower than the previous $79,990 version, still exceeds CEO Elon Musk's promised starting price of $40,000 from 2019, indicating market pricing pressures.
- Performance and Features: The new Cybertruck features dual-motor all-wheel drive with an estimated range of 325 miles, standard features include a powered tonneau cover and multiple power outlets, although it sacrifices some premium elements, it still offers significant utility.
- Market Expansion Strategy: As U.S. demand cools, Tesla is expanding Cybertruck availability overseas, having opened orders in the UAE, Saudi Arabia, and Qatar, with pricing starting at 435,000 riyals (approximately $116,000) in Saudi Arabia, highlighting the potential of international markets.
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See More
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- Declining Sales: Tesla's Model S and X deliveries totaled only 12,881 units in Q4, significantly lower than the 323,800 units for Model 3 and Y, indicating that high-priced models lack market competitiveness, prompting a strategic shift towards more popular lower-cost models.
- Future Strategy: CEO Elon Musk stated that Tesla is moving towards an autonomous future, and discontinuing high-priced models is a strategic decision to redirect resources towards the more promising autonomous taxi, Cybercab, aligning with changing market demands.
- Capital Expenditure Plans: Tesla plans to invest $20 billion by 2026, repurposing space at its Fremont factory previously used for S and X production to manufacture the Optimus robot, demonstrating the company's focus on future technologies and a shift in investment direction.
- Market Trends: As demand for lower-cost electric vehicles rises, Tesla's decision to discontinue Model S and X reflects broader industry trends, positioning the company to enhance its competitiveness in the electric vehicle sector by adapting to market changes.
See More
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- Verdict Upheld: A federal judge in Miami has refused to overturn a $243 million jury verdict against Tesla, asserting that the evidence presented at trial sufficiently supports the jury's decision, highlighting Tesla's legal accountability regarding its Autopilot system.
- Accident Details: The fatal 2019 crash in Florida involved a Tesla owner using Enhanced Autopilot, who mistakenly believed the system would brake, resulting in the vehicle accelerating over 60 mph and colliding with a parked car, leading to one death and severe injuries.
- Legal Controversy: Plaintiff attorneys argued that the design of Autopilot and Tesla's representations about its capabilities directly contributed to the accident, while Tesla's legal team sought to significantly reduce compensatory damages and limit punitive damages under Florida law.
- Market Reaction: Tesla shares fell 0.14% in after-hours trading, indicating market concerns over its Autopilot technology, despite a stronger long-term price trend, as short and medium-term trends remain negative.
See More
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Advancements in Robotics: The event highlights the rapid development of artificial-intelligence-trained robots capable of performing labor-saving tasks, aligning with recent discussions on the accelerating pace of the robot revolution.
See More
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- Economic Data Impact: U.S. Q4 GDP grew by 1.4%, below the expected 2.8%, while the core PCE price index rose by 2.7%, exceeding expectations of 2.6%, suggesting inflation pressures may limit the Fed's ability to cut rates, affecting market sentiment.
- Manufacturing Activity Decline: The February S&P manufacturing PMI unexpectedly fell to 51.2, below the anticipated 52.4, indicating weakness in manufacturing that could challenge economic recovery and further exacerbate market uncertainty.
- Earnings Optimism: Over 74% of S&P 500 companies reported earnings that beat expectations, with Q4 earnings growth projected at 8.4%, demonstrating strong corporate profitability that may support the stock market despite macroeconomic challenges.
See More
