Tesla skids 3% to a new 52-week low with earnings on tap for Tuesday (NASDAQ:TSLA)

Tesla (NASDAQ:TSLA) pushed lower in premarket action after a weekend of perhaps troubling developments on the pricing front. The electric vehicle maker lowered prices in many of its major markets, including China and Germany, following notable price cuts in the United States. “Tesla prices must change frequently in order to match production with demand,” noted CEO Elon Musk on X.

Due to the softening demand, Musk reportedly reasoned that Tesla should cut 20% of its workforce due to the company’s Q4 deliveries falling by that percentage, which may be another indication that Tesla (TSLA) is prioritizing the buildout of a robotaxi fleet over the development of the mass-market Model 2.

HSBC analyst Pushkar Tendolkar noted that Tesla (TSLA) has already cut prices by 9% to 10% in 2024, but cheaper Tesla vehicles are not necessarily driving higher volumes, as seen with Q1 deliveries. “The volatility of prices has however impacted the appetite of professional buyers such as leasing and rental companies – Sixt and Hertz have elected to reduce their Tesla fleets due, in part, to uncertain used pricing,” observed Tendolkar. Meanwhile, Deutsche Bank analyst Emmanuel Rosner said TSLA stock will need to undergo a potentially painful transition in ownership base, with investors previously focused on Tesla’s EV volume and cost advantage potentially throwing in the towel.

Shares of Tesla (TSLA) were down 3.11% to $142.48 in premarket trading on Monday. The EV stock is down more than 40% on a year-to-date basis.

Tesla (TSLA) is due to report Q1 earnings on Tuesday. While Tesla is expected to report revenue of $22.5B and EPS of $0.50, the biggest focus may be on the automotive gross margin line. On the conference call, some of the key topics will be AI initiatives, margin expectations, FSD take rates, as well as what the product roadmap looks like, including if the mass-market Model 2 is still part of the master plan. While Elon Musk is likely to talk up the potential of the robotaxi business, Morgan Stanley warned investors to keep their hopes down. “The event should offer some important clues as to how Tesla approaches autonomy (gen AI, non-rules based) and why the company is seemingly rapidly stockpiling its computational horsepower. However, while we are prepared to see evidence of improved system efficacy, we ultimately believe the path to commercialization at scale for driverless cars is much further out than the market expects,” warned analyst Adam Jonas. Options trading on Tesla implies a 10% share price swing after the report drops. Tesla fell 12% immediately after its Q4 earnings report. EV stocks with the tightest trading correlation to Tesla after earnings are Faraday Future Intelligent (FFIE) and NIO (NIO).