Tesla shares tumble on price cuts in run-up to earnings

Tesla TSLA.O fell more than 3 percent in premarket trade on Monday, as its latest global price cuts fanned Wall Street concerns about dwindling margins at the electric-vehicle maker in the run-up to its earnings report later this week.

The company slashed prices by up to $2,000 on its vehicles such as the Model 3 and Model Y in several markets including the US, China and Germany over the weekend, in its latest effort to push demand slowed by high interest rates.

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The cuts come ahead of its quarterly earnings on Tuesday, where the world’s most valuable automaker is expected to post its first revenue drop and lowest gross margin in nearly four years, according to LSEG data.

Investors are awaiting clarity from CEO Elon Musk on Tesla’s strategy after he cut 10 percent of the company’s staff last week and said focusing on autonomous driving was a “blindingly obvious” move.

Musk had earlier this month announced an event in August to unveil “Robotaxi,” after a Reuters report on April 5 said Tesla had scrapped its plan to develop its long-awaited affordable EV in favor of robotaxis. Musk said after the report that “Reuters is lying,” without citing any inaccuracies.

Wedbush Securities analyst Dan Ives wrote in a preview note last week that the earnings would be a “moment of truth” and “one of the most important moments in the company’s history.”

Tesla shares were down at $141.80 in premarket trading on Monday. The shares have lost about 41 percent of their value so far this year with surveys and experts saying Musk’s tilt toward right-wing politics and polarizing public statements turned away some prospective Tesla buyers.

Monday’s drop was set to erase about $15 billion from its market value of $468 billion. While that still makes Tesla the world’s most valuable automaker, Toyota 7203.T has slowly been narrowing the gap on the back of a boom in demand for its hybrid vehicles.

The Japanese automaker had a market capitalization of $306 billion, as of last close.