![]() While that's propped up demand, the cuts have eaten into Tesla's profit margins, causing its stock to slip after its first-quarter earnings call. Tesla has been waging a pricing war with its rivals, having slashed prices on key models repeatedly in the past year to stay competitive. Though most of Tesla's early sales were done in cash, it's matured as a company and now has the cash flow to support a finco, the note added. Financing is now the "norm" in the auto industry. That's something Tesla needs to incorporate into its business, especially if it plans on capturing more of the EV market, the analysts said. Many auto makers already have a so-called captive financing unit – or a subsidiary financial company that offers loans for retail sales – with firms like Toyota, Honda, and Ford using their respective financing arms to offer financing for prospective buyers. "We think the time for full-line Tesla Finco has arrived." But as Tesla looks to 'acquire' the next 5 to 10mn, customers require new solutions in a market where 90% are bought on monthly payment," the bank's analysts said in a note this week. "For years Tesla could sell a car for cash or minimal leasing. ![]() Investors shouldn't be surprised if Tesla were to soon launch its own full-scale financing arm as part of the company's efforts to pull more customers and grab more share of the electric vehicle market, Morgan Stanley said. That could potentially draw in more customers as Tesla wages a price war against its rivals.Analysts said it was time for the EV maker to create a subsidiary that finances retail sales.Investors can expect Tesla to soon offer its own options for financing, Morgan Stanley said.The quarterly results allowed Tesla to turn a profit in consecutive years for the first time since its founding in 2003. It will be the first call Musk has joined since he announced in July 2021 that he would only attend if he has “something really important that I need to say.” The stock advanced 2.1% to $937.41 at the close Wednesday in New York and is down 11% this year.Ĭhief Executive Office Elon Musk is expected to join a conference call later Wednesday to update Tesla’s “product roadmap.” That may include new information about the Cybertruck, a prototype that Musk recently tweeted he is personally testing at Tesla’s new factory in Austin. Shares of Tesla fell as much as 6.1% in extended trading after the results were announced before recovering somewhat. Most other major automakers saw sales tumble last year due to shortages of semiconductors and other key parts that limited their output of vehicles. The company delivered more than 936,000 vehicles worldwide in 2021, up 87% from the year before and above the 50% average annual expansion projected over the course of several years. “Our own factories have been running below capacity for several quarters as supply chain became the main limiting factor, which is likely to continue through 2022,” Tesla said. Revenue grew 65% to $17.7 billion, compared with estimates of $16.6 billion, the company said Wednesday. That was above analysts’ estimates of $2.36 a share and a record. The automaker, headquartered in Austin, Texas, reported fourth-quarter earnings of $2.88 billion, or $2.54 a share, excluding some items, on strong sales of its mass-market models.
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