Tesla Stock Up Due To Crowds At China Stores: Buyers Or Protesters?
As they say, Tesla is continuing to pull out all the stops to sell more cars, especially in China. The EV brand offered several discounts and incentives on new cars recently and eventually began offering some deals in the US as well. Reports suggest that the rise in store traffic in China has caused the company’s stock to head north, though other reports claim the crowds are actually there to protest.
Tesla’s Giga Shanghai is cranking out cars after recent upgrades at the factory, and it seems the electric automaker aims to sell every last one of them as quickly as possible. Not long after Tesla announced another significant price cut to the Model 3 and Model Y in China, the company’s stock reportedly tanked. However, shortly thereafter, people were seen crowding local Tesla stores, which allegedly caused the stock to turn positive.
Videos similar to the above started to circulate on social media, and people were wondering if the crowds outside the Tesla stores in China were there to take advantage of the price cuts, or to protest. Some folks claimed a combination of both situations appeared to be underway.
According to a recent article by Electrek, it seems the flocks of folks at the Tesla stores in China were primarily there to protest, not to buy. While the price cuts are positive for people hoping to buy a Tesla, there are certainly negatives that come with it. As Tesla lowers prices, it suggests that demand is falling, reduces resale values, and will lead to lower margins and less profit. These are the type of concerns that push the stock down, and it has already fallen substantially over the past few months.
Electrek notes that groups of people in China who recently bought a Tesla actually announced on Weibo that they were organizing protests at Tesla stores. The videos shared on social media reportedly came from those groups of protesters. If you recently bought a car and then it becomes available for a much lower price, not only might you be jealous and want a discount, but the value of your new car immediately drops.
In the midst of all of this, Tesla has continued to say that it doesn’t have a demand problem. It also maintained for years that its pricing is consistent and it doesn’t offer discounts. More recently, Tesla fired back at media reports claiming it would be limiting production and shutting down the factory in Shanghai for a time. Despite its beef with the media, Tesla did limit production at the factory at the end of the year and it did shut down briefly.
In what appears to be an attempt to pacify protestors, Tesla China Vice President Grace Tao came forward with a statement claiming that the price drops in China are thanks to “engineering innovations.” Once again, Tesla is saying there is no issue with demand and it’s not lowering prices to lure buyers, but rather, improvements have been made and costs are down, allowing Tesla to drop prices.
It will be interesting to continue to watch this all unfold for Tesla in China and across the globe. What do you think? Is Tesla trying to hide a demand issue? Is it really giving back to buyers thanks to innovations and cost reduction? Let us know in the comment section below.
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