When Tesla cut its vehicle prices and more recently announced a pay raise for its German plant workers, it widened its lead against the other firms. The competitors are nearly 10 years too late in breaking into Tesla’s market.
Tesla will announce details of the pay raise in November. It previously increased wages by 6% in the previous year. The wage increase averts any risk of a strike. To grow market share and increase demand, Tesla cut the prices of its Model 3 by 2.7%. The Model Y SUV will cost 4.2% less, or $2,000 less. The base Model 3 is now 17% lower compared to the start of the year.
Rivian (RIVN) has serious near-term costs that investors need to worry about. To reduce losses per vehicle sold, the firm is front-loading or fast-forwarding its capital expenditure. It priced its $1.5 billion green convertible senior notes due in 2030. If shares trade at $30.28, shareholders will get diluted. Although the conversion price is substantially higher than the current price, it sets a limit on the stock’s upside.
Polestar (PSNY), is even less attractive. The firm filed a mixed shelf offering to raise as much as $1 billion. Investors should beware of buying PSNY stock amid further dilution.
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