Tesla's stock continues to slide as it cuts prices on Model Y and reportedly eliminates low-priced Model 2.

• On Friday, shares of Tesla (Tesla) continued their deep year-to-date decline on an inventory backlog.

• The company implemented a price cut on some Model Y models this week, which amounted to about $5,000.

• Also, there are reports that Tesla is canceling its low-cost Model 2 program.

Tesla shares continued to fall on Friday, following reports that the company is canceling its low-cost Model 2 program while it tackles a massive inventory backlog that appears to have led to significant price cuts for some of its Model Y models.

On Friday, the company's shares fell as much as 61 TP3T, widening their one-week decline to about 81 TP3T and their year-to-date decline to about 341 TP3T.

Reuters, citing three people familiar with the situation as well as internal company sources, reported that Tesla canceled plans to develop its long-promised low-priced car, which was expected to sell for just $25,000.

Tesla plans to continue to focus on developing self-driving robot rentals rather than developing low-cost cars, the report said.

"Elon's instructions are to go all in on developing self-driving taxis," a source told Reuters.

The report comes amid concerns about Tesla's deteriorating profit margins and increased competition from low-cost Chinese automakers.

Tesla's chief executive Elon Musk echoed the report on X, saying, "Reuters (is) lying (again): "Reuters (is) lying (again)."

According to Bloomberg, Tesla delivered 386,810 vehicles in the last quarter, well below analysts' expectations and 46,561 below first-quarter production of 433,371, the company's largest-ever inventory of vehicles.

The company appears to be clearing out its inventory backlog by aggressively cutting prices on its most popular model, the Model Y. The company is also cutting prices on its most popular models. As of Friday morning, some Model Y models have had their prices reduced by about $5,000, including the Range and Performance versions.

The price cut for certain Model Y vehicles comes just days after the company said it would raise the price of the Model Y by $1,000.

Tesla attributed the weakness in first-quarter car deliveries to a temporary shutdown at its Berlin plant, Red Sea transportation disruptions, and early Model 3 volume production at its California plant.

But weakening demand for Tesla cars could also be a big factor in the recent poor sales performance, especially amid growing competition from China and the increasing allure of hybrids in the U.S., said Ryan Brinkman, an analyst at JPMorgan.

The difference between first-quarter vehicle production and deliveries "dispels the notion that first-quarter deliveries were somehow supply-constrained rather than demand-constrained," Bollinger Kerman said in a report Wednesday.

He cut his price target on Tesla to $115, warning investors about the company's "harsh valuation."

"With deliveries now known to have contracted in 1Q24, we are very confident that both the automotive industry and the company's aggregate revenues will experience negative growth in the first quarter, which will likely cause even the most bullish of Tesla's investors to do a sentiment check," said Bryn Konkman.

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