Tesla stock hits crucial support as Xpeng teases 'Model Y killer' ahead of earnings

Tesla stock dropped to a crucial support level on Friday as traders waited for the upcoming earnings. It also retreated as Xpeng, a top Chinese rival, hinted that it was about to launch a new Model Y killer. TSLA dropped to $380, down by over 23% from its highest point this year.

Xpeng hints of a new Model Y killer

Xpeng, a top Chinese electric vehicle company worth over $12 billion, hinted that it was working on a new car that will take on Model Y in China and Europe. In a statement, the company’s co-founder said:

“I think we’re not far from beating Model Y. I really believe in that.”

The statement came after the company launched L03, its more affordable electric SUV that starts at about 35,600 euros. It launched this model simultaneously in China and Europe. It is a more affordable vehicle than Model Y, which starts at 39,990 euros.

Xpeng hopes that the new vehicle will help it supercharge its deliveries and stock. In a recent report, the company said that its deliveries stood at 40,126 vehicles in June and 103,295 in the second quarter. It delivered 34,611 vehicle in June and 103,181 vehicles in Q2 of last year.

Tesla has come under significant competition pressures in the past few years as Chinese companies have continued launching new models and gaining market share. Some of its top competitors are companies like BYD, SAIC, Nio, and Li Auto. 

Tesla earnings are coming up

The next key catalyst for the TSLA stock price will be the upcoming earnings report that comes out on Wednesday. 

Analysts expect these results to show that its revenue jumped in the second quarter after its strong deliveries. It produced 450,000 vehicles in the quarter and delivered 480k. This was a big turnaround after the company made 408k vehicles and delivered 358k.

One possible reason for the rebound is that gasoline prices jumped in the second quarter as the US-Iran war escalated. In most periods, a surge in gasoline prices pushes more people to buy EVs, which are often cheaper to maintain.

The average estimate among analysts is that the company’s revenue will come in at $26.36 billion, up by 17.20% YoY. For the year, analysts estimate that its revenue will jump by 10% to $104.5 billion.

In addition to the rising competition, the company is also seeing elevated costs, especially in the data center industry.

Tesla stock price technical analysis

TSLA stock chart | Source: TradingView

The daily chart shows that the TSLA stock price has slumped in the past few months, moving from a high of $498 to the current $380. It has recently dropped below the 50-day Exponential Moving Average (EMA).

The Percentage Price Oscillator (PPO) has moved below the zero line and is pointing downwards. Notably, it is hovering slightly above the ascending trendline that links the lowest swing since April last year.

Therefore, the most likely scenario is where the stock drops further, potentially to $350 after earnings. On the other hand, a rebound above $400 will point to more upside.