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Tesla (NASDAQ:TSLA) rose on Tuesday as more analysts pointed to the long-term benefits of the latest price cuts, even as near-term ones are trimmed due to tightening margins. The general view is that market share advantages could be dramatic as EV competitors struggle against the backdrop of new pricing.
Jefferies analyst Philippe Houchois said Tesla (TSLA) is still leading the industry toward a better business model, but warns the road is likely to be bumpier than some bulls anticipated. A Buy rating was maintained on TSLA while the price target was reduced to $180 from $350.
Bank of America analyst John Murphy said the rationale for capping TSLA prices may reflect increased competition with a spate of new EV models, weaker auto demand amid the difficult macro backdrop and a strategy to crowd out competition, as capacity increases across the industry. The Austin-based company is also said to have been scrambling to get more vehicles eligible for the Inflation Reduction Act tax credits, as base prices for the Model Y and Model 3 in the US are now below required MSRP thresholds. The company kept a neutral rating on TSLA and lowered its price target to $130.
Stephen Reitman, an analyst at Societe General, said Tesla’s (TSLA) price action in January showed that demand for its vehicles at pre-price cut levels was not unlimited or simply constrained by capacity, as some bulls claimed, but suggested also point to a strategic upside potential with market shares.
Shares of Tesla (TSLA) rose 5.78% to $129.48 in Tuesday morning trade, making it among the leading gainers in the electric vehicle sector. TSLA is also at its highest level since late December, after rising 20% higher over four weeks.
Read a new bullish Tesla (TSLA) breakdown from Seeking Alpha author Envision Research.