In the last few quarters, Tesla (TSLA) has managed to report profitability with the help of significant improvements in Model 3 production. On February 28, the company launched a $35,000 version of Model 3. The lower priced Model 3 version will likely take a toll on Tesla’s profitability. As a result of lower margins from the new Model 3 version, Tesla doesn’t expect to be profitable in the first quarter. However, Tesla CEO Elon Musk’s strategy to boost first-quarter car sales seems to be working.
On March 10, through an official blog post, Tesla informed investors that the company will be increasing the prices of its cars by ~3% worldwide at midnight on March 18 to keep “significantly more stores open.” The price increase will be applied to all Tesla cars except for the $35,000 version of Model 3.
Musk highlighted the update about Tesla’s increased car prices with a tweet to his more than 25 million Twitter followers on March 11. In the tweet, he said, “Tesla car prices go up ~3% next week, except for $35k Model 3. Order online at http://Tesla.com before then for current prices.”
On March 16, Musk gave another reminder about the increased prices. He said, “Reminder to buy our S3XY cars before midnight on Monday! Prices rise slightly worldwide on Tuesday.”
As of March 19, the Invesco QQQ Trust (QQQ) had an investment ~$389.2 million in Tesla.
Price increase postponed
Tesla car prices didn’t increase on March 18 as initially planned. On March 19, on Tesla’s official Twitter account, the company said, “Due to unusually high volume, Tesla was unable to process all orders by midnight on Monday, so the slight price rise on vehicles is postponed to midnight Wednesday.” Musk quickly retweeted Tesla’s tweet.
Tesla might have faced issues processing all of the orders by midnight on March 18. However, Tesla has successfully processed a significantly high volume of reservations on many occasions in the past including after its Model 3 was unveiled in 2016.
Tesla’s issues with processing car orders by midnight on March 18 might sound a little unusual. The delay might be Tesla and Musk’s strategy to boost car orders in the first quarter.