Please ensure Javascript is enabled for purposes of website accessibility

Why Tesla Stock Jumped Today

By Joe Tenebruso – Oct 1, 2020 at 7:09PM

You’re reading a free article with opinions that may differ from The Motley Fool’s Premium Investing Services. Become a Motley Fool member today to get instant access to our top analyst recommendations, in-depth research, investing resources, and more. Learn More

Price cuts could boost sales of the company's electric vehicles.

What happened

Shares of Tesla (TSLA -0.19%) rose 4.5% on Thursday after the electric vehicle maker dropped the price of its Model 3 sedan in China. 

So what 

Tesla cut the base price of the battery-powered Model 3 by 8% to 249,900 yuan (approximately $36,800), after factoring in Chinese government subsidies. That puts it slightly below the price of a similar version of the vehicle in the U.S., prompting speculation that Tesla could also move to reduce prices in its home market. 

An upwardly sloping digital chart.

Tesla's stock rallied on Thursday on optimism that lower prices will help to fuel vehicle sales in China. Image source: Getty Images.

A new type of battery may have made the price cuts possible. Tesla's standard-range Model 3 sedans will feature less expensive lithium-iron-phosphate batteries, rather than nickel-manganese-cobalt batteries, according to Reuters.  

Now what

Investors are looking ahead to Tesla's upcoming third-quarter vehicle deliveries report, which is expected to be released in the coming days. The consensus forecast calls for Tesla to report deliveries of 140,000 vehicles, representing growth of 54% compared to the second quarter. 

Some industry watchers say strong vehicle sales in China could help Tesla top Wall Street's estimates. And price cuts might help to drive sales even higher in the quarters ahead.

Joe Tenebruso has no position in any of the stocks mentioned. The Motley Fool owns shares of and recommends Tesla. The Motley Fool has a disclosure policy.

Invest Smarter with The Motley Fool

Join Over 1 Million Premium Members Receiving…

  • New Stock Picks Each Month
  • Detailed Analysis of Companies
  • Model Portfolios
  • Live Streaming During Market Hours
  • And Much More
Get Started Now

Stocks Mentioned

Tesla Stock Quote
$182.86 (-0.19%) $0.34

*Average returns of all recommendations since inception. Cost basis and return based on previous market day close.

Related Articles

Motley Fool Returns

Motley Fool Stock Advisor

Market-beating stocks from our award-winning analyst team.

Stock Advisor Returns
S&P 500 Returns

Calculated by average return of all stock recommendations since inception of the Stock Advisor service in February of 2002. Returns as of 11/28/2022.

Discounted offers are only available to new members. Stock Advisor list price is $199 per year.

Premium Investing Services

Invest better with The Motley Fool. Get stock recommendations, portfolio guidance, and more from The Motley Fool's premium services.