Tesla (NASDAQ: TSLA) stock fell on Tuesday amidst Ford’s entrance into the electric vehicle (EV) price war and a cautionary statement from Chinese EV manufacturer XPeng (NYSE: XPEV).
Ford announced on Tuesday that it is cutting prices of 2023 Mustang Mach-E crossover vehicles by about $3,100 to $8,100, depending on the version. However, the company clarified that it will not offer discounts on the 2024 models.
In addition, Chinese EV manufacturer XPeng (XPEV) delivered alarming remarks about the sector’s future, warning of a potential “bloodbath” due to intense competition. Both news has contributed to the decline in Tesla stock.
Ford’s decision to cut prices indicates an oversupply of electric vehicles (EVs) that require selling off, and when coupled with XPeng’s remarks, it suggests that pricing pressures in the EV market are likely to persist for some time.
The ramp-up of production from competitors has squeezed Tesla’s profit margins and led many EV makers to cut prices. Tesla’s fourth-quarter operating profit margin stood at around 8%, marking a year-over-year decline of roughly eight percentage points. Analysts on Wall Street anticipate first-quarter operating profit margins to hover around 9%.
Tesla (NASDAQ: TSLA) Stock Performance
TSLA stock saw a 3.10% decrease on Tuesday, closing at $193.76, while the Nasdaq Composite and S&P 500 experienced a decline of 1.1% and 0.6%, respectively. Ford (F) stock also dropped by 0.41%.
Shares of Tesla’s peers were also down on Tuesday, with Lucid Group (NASDAQ: LCID) falling 0.8%, NIO shares down 2.9%, and BYD stock falling 4.3% in Hong Kong trading.
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