Tesla reverses its price cuts, and Cathie Wood sets a market cap target of $6 trillion.

In a span of fewer than twenty-four hours from divulging to stakeholders that it will concentrate on expansion of the quantity of vehicles produced, Tesla is now implementing a price hike on its upscale automobiles in the United States.

Tesla reverses its price cuts, and Cathie Wood sets a market cap target of $6 trillion.

Tesla Inc.'s shares plummeted on Friday, following one of the year's most significant single-day declines. This was triggered by the automaker's decision to hike prices on its luxury vehicles in the US, just a few hours after CEO Elon Musk shared that the company would prioritize sales volume over profit growth.

While Tesla had previously announced massive price cuts to its flagship models, it has now increased the prices of Model S and Model X.

However, new buyers will be offered three years of free Supercharging. This move comes after the automaker lowered prices on its entire vehicle lineup earlier this year, with the Model S and Model X receiving the most significant discounts. 

The company's flagship sedan is now priced at $85,000, while its flagship electric SUV costs $95,000.

In an overnight update to its online configurator, Tesla hiked the Model S's price by $2,500.

This price increase applies to both the standard Long-Range version and the top-tier Plaid version. Nevertheless, the company is offering three years of free Supercharging with all new purchases.

The same offer has been applied to the Model X

Tesla's continuous price cuts have kept its vehicles below their December 2022 levels, resulting in a steady market share but a reduced profit margin.

 Elon Musk recently cautioned investors that the company's priority would be to increase sales volumes and expand its market dominance, rather than focusing on profitability, as these steps are necessary to achieve recurring revenue and long-term earnings growth through the sale of automated vehicles in the future.

One of Tesla's largest shareholders, Cathie Wood, who leads Ark Invest, acquired 256,023 Tesla shares during the company's Thursday selloff, while raising her five-year price target to $2,000 per share. She cited Tesla's potential for enormous growth from its upcoming fleet of robotaxis, which would increase the company's market capitalization to approximately $6.4 trillion by 2027. Her "bull case" values Tesla at $2,500 per share.

Following a nearly 10% drop in Tesla's shares yesterday, which closed at $162, the shares traded 1.2% higher in early afternoon trading Friday, selling at $164 each. Tesla reported its lowest quarterly profit margins in more than two years, partly due to its relentless 2023 price cuts, with earnings declining 20.5% year on year to 85 cents per share on $23.33 billion in revenue.

The company also reported adjusted automotive margins of 18.3%, down from 26.8% in the first quarter of last year and 22.2% in the final three months of 2022, following a series of price cuts in its largest global markets.

Musk explained during a conference call with investors late Wednesday that increasing the company's sales volumes and expanding its fleet is the right choice rather than a lower volume and higher margin.

He added that the company expects its vehicles to generate significant profit through autonomy over time. "So we do believe we're laying the groundwork here and then it's better to ship a large number of cars at a lower margin and subsequently harvest that margin in the future as we perfect autonomy," he said. "This is an extremely important point."

Tesla has delivered 422,875 novel automobiles in the first quarter, indicating a 36.4% escalation compared to the corresponding phase of the antecedent year. However, the aggregate did not meet the expectations due to the overabundance of production as opposed to the demand.

The pandemic-linked closures and supply chain interruptions that occurred at the Shanghai factory faded away, thereby hiking the production to 440,808 vehicles by 44.5%.

The numerical statistics fall egregiously short of the company's own projection of 1.8 million deliveries for 2023. Elon Musk, the CEO of Tesla, suggested that "if it's a smooth year without some big supply chain interruption or massive problem," the deliveries could soar up to 2 million.

Nevertheless, he declined to confirm that forecast during the conference call held last night. Tesla, however, upheld its official estimation of 1.8 million deliveries.

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