(Bloomberg) — Tesla Inc. is slashing prices of its best-selling vehicle in a bid to clear its biggest-ever stockpile.
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The company is marking down Model Y sport utility vehicles it has in inventory, with the rear-wheel drive version going for $4,600 less than the cost to custom order the sport utility vehicle. Long-range and performance Model Ys are discounted by at least $5,000.
Tesla is offering the deals after producing 46,561 more vehicles than it delivered in the first quarter, adding more cars to inventory than ever before. While the company blamed its global sales decline in part on changing over its California plant to make the upgraded Model 3 sedan and shutdowns of its factory in Germany, some analysts aren’t buying it.
The difference between the number of vehicles Tesla built and sold in the quarter “dispels the notion that 1Q deliveries were somehow supply rather than demand constrained,” Ryan Brinkman, a JPMorgan Chase & Co. analyst who has the equivalent of a sell rating on Tesla stock, wrote in an April 3 report.
Brinkman cut his price target for the shares to $115 from $130 and lowered estimates for first-quarter revenue and earnings per share. He now projects Tesla will report a $1.3 billion free cash outflow, rather than a more than $300 million inflow, due to an expected record increase in finished goods inventory.
Tesla shares fell more than 2% shortly after the start of regular trading Friday. The stock has dropped 31% this year, the second-worst showing on the S&P 500 Index.
(Updates share move in the last paragraph.)
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