Tesla Announces China Megafactory and Price Cuts Impact Margins

Tesla announced plans to build a new Megapack factory in Shanghai, capable of producing 10,000 Megapacks per year, to supplement its California factory. Tesla's stock fell nearly 3% after the company made its third price cut this year, reducing Model S and X prices by $5,000 and Model 3 and Y prices by $1,000 to $2,000. The price cuts come ahead of new battery and mineral component requirements to qualify for the full $7,500 tax credit for EVs. Investors are waiting to see how the price cuts will affect Tesla's Q1 gross margins, with Citigroup and Wolfe Research analysts offering differing opinions.