Tesla Inc. expanded It climbed on Friday, pushing weekly gains to nearly 35%, as investors cheered the electric car maker’s earnings and CEO Elon Musk’s assurances that demand is not an issue for Tesla.
Tesla shares closed at their highest since December 9, when they closed at $179.05. The stock also extended its winning streak for a sixth day, up 41% in that period.
The weekly gain of 33% was the best since the week ending May 10, 2013 when the stock rose 40.7%.
On Wednesday, Tesla reported mixed quarterly results, with revenue just below Wall Street expectations, but Wall Street focused on optimism in Tesla’s 2023 production outlook.
CEO Elon Musk has also said he wants to relieve “concern” that Tesla is going through demand problems. January orders are stronger than ever, and demand far outpaces Tesla’s production rate.
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Tesla earlier this month cut the prices of its electric cars in the US and Europe by up to 20% depending on region and model, but Musk said the price cuts will broaden the appeal of Tesla cars to buyers.
Other well-received news on Wednesday included the announcement that a “next-generation” vehicle platform had been launched, with details at Tesla Investor Day on March 1, and that production of the Cybertruck, Tesla’s electric truck, is on track later. This year and for the volume of production in 2024.
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On Friday, Morgan Stanley’s Adam Jonas added his voice to those who believe that price cuts, far from being a sign of trouble for the electric car maker, may be ushering in a new era in electric vehicles and a “significant deflation.”
“While it’s still early days after Tesla’s price cuts, we believe history will mark this time as the moment when changes in design, manufacturing technology, and size caused a deep contraction in electric vehicle prices,” Jonas said.
Changes in industry composition and market share could take years to implement, “but we believe that the electric vehicle outlook and manufacturing plans of competing EV operators (startup and legacy) may need to be fundamentally reconceived,” he says.
The downturn “has transformed the competitive landscape of cars,” Jonas said, and prices fell even more sharply after Ford Motor introduced its Model T and revamped its assembly line.
However, Tesla shares still have to catch up with the broader market. Shares are down about 35% in the past 12 months, compared to losses of about 5% for the S&P 500.