EV giant Tesla Inc TSLA on Wednesday warned it may further cut prices on its vehicles.
What Happened: CEO Elon Musk noted that the affordability of anything bought with debt decreases as interest rates rise. Up until recently, it was the sharpest interest rate rise in history and Tesla had to reduce the price of their cars because the interest payments increase the price of the car, Musk said.
“If somebody's got a crystal ball for the global economy, I really appreciate it, if I could borrow that crystal ball,” Musk laughed. “I mean, one day, it seems like the world economy is falling apart and the next day, everything is fine. I don't know what's going on.”
Responding to a question by William Stein of Truist Bank on whether Tesla thinks it can hit its delivery forecasts this year with current pricing, Musk said, “If the market condition is stable, I think prices will be stable. If they're not stable, then we would have lower prices. Yes.”
Tesla is targeting 1.8 million vehicle deliveries this year.
Why It Matters: Tesla has been cutting prices on its vehicles across geographies since January, starting a price war in the EV market as competitors follow suit to keep up with the competition. The slew of price cuts also enabled better deliveries for the EV maker in the last quarter.
However, Tesla’s vehicle prices have largely been stable with no major price changes for the last two months, leading many to wonder if the slew of price cuts is eventually coming to a close.
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