Tesla Price Cuts The 'Right Medicine At The Right Time:' Analyst via insideevs.com
Analysts' reactions to the price cuts announced by Tesla last week are mixed. Some believe the EV maker made the right move at the right time, while others are concerned about thinning gross profit margins.and to the Model 3 and Model Y in Europe, following similar price cuts in China and Asia a few days before. The company reportedly did so to boost demand and make sure that more of its vehicles qualify for the Inflation Reduction Act's new EV tax credit.
Analysts and investors had been predicting price cuts were coming as Tesla's inventory reportedly piled up. According to Wedbush analyst Dan Ives cited byIn a note to clients on January 13, Ives argued that lowering prices was the correct strategic move in the face of possible waning demand and increased competition.
"Tesla now has global scale it did not have a few years ago and has margin flexibility to make aggressive moves like this to gain further market share in this EV arms race," Ives wrote. He added that the price cuts will boost demand by 12-14 percent globally in 2023, as Tesla and Musk go on the"offensive.""This is a clear shot across the bow at European automakers and U.S.
Morgan Stanley's Adam Jonas told clients that the big price cuts are a way for Tesla to"flex its muscles" and put pressure on competitors. "In an environment of EV deflation, we believe Tesla's strong balance sheet, cost/technology leadership and scale will be critical to solidifying their competitive advantage," Jonas wrote."Within a painful reset of EV expectations globally, we see Tesla as a winner and reiterate our [Overweight] rating."
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