Tesla reduces prices on Models S and X amid stock slump

A Tesla Model 3 sedan is displayed during its launch in Hawthorne

A Tesla Model 3 sedan, its first auto aimed at the mass market, is displayed during its launch in Hawthorne, California, U.S. March 31, 2016.

Analyst Adam Jonas said Tesla's rising debt pile and geopolitical exposure, including the risk that Chinese demand for the company's cars could suffer, had driven him to slash his "bear-case" valuation to $10 from a previous $97.

Tesla wouldn't say if slowing sales influenced its decision, but it said it periodically adjusts prices and available options, according to the Associated Press. The prices don't include federal and state tax credits for electric-vehicle purchases. The decreases offset price increases from a month ago when Tesla offered longer battery range and added a new drive system and suspension.

The moves come as Tesla's stock is under pressure, at times dropping below $200 per share this week. Several analysts have questioned whether the company can sell enough cars to cover its expenses without dipping into cash reserves. The share price has recovered somewhat this week, to be trading about $US205 on Tuesday. They have fallen more than 38% so far this year, cutting the company's market value more than $20 billion to $36.5 billion. Shares dropped below eight percent to their lowest close since December 2016 last week after the National Transportation Safety Board (NTSB) said that Tesla's autopilot driver assistance technology was active during a fatal crash.

The Model S sedan was reduced by $3,000, while the Model X SUV received a $2,000 cut. "By any reasonable standard, these small changes are not newsworthy", the company said in a statement.

"Tesla has grown too big relative to near-term demand, putting great strain on the fundamentals", wrote Jonas, rated a five-star analyst by Refinitiv for the accuracy of his forecasting on the company.

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Ives called Tesla a "code red" situation.

Tesla's recent effort to raise $2 billion in fresh capital-including CEO Elon Musk buying $10 million worth of Tesla stock himself-was seen as bad news on Wall Street. Sales tumbled 31% in the period.

In a note Sunday, Wedbush analyst Dan Ives wrote that Tesla faces a "Kilimanjaro-like uphill climb" to hit targets for profitability in the second half of the year.

The entertaining banter exchanged between Elon Musk and MERL's account landed Mr Koszary in Tesla one year after he shared the famous meme.

This story has been published from a wire agency feed without modifications to the text.

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