Analysts at Deutsche Bank have "strongly reiterated" their 'buy' rating for Tesla Inc (NASDAQ:TSLA) after the electric vehicles maker slashed the prices of many of its models in North America and Europe, by 6%-20%.
In a note to clients, the German bank's analysts said: "These cuts bring down US prices for most Tesla models and configurations below the IRS threshold to qualify for the $7,500 IRA EV tax credit; but their unprecedented magnitude and global scope clearly also reflect pressure on demand, amid deteriorating global macro and growing EV competition."
They added: "Initial market reaction was to view this as a costly reactive move which will undoubtedly put considerable pressure on Tesla gross margins and earnings. Instead, we believe this likely is a bold offensive move, which secures Tesla’s volume growth, puts its traditional and EV competitors in great difficulty, and showcases Tesla’s considerable pricing power and cost superiority."
"Just as importantly, this could be the cut to end all cuts, helping reset Tesla’s 2023 estimates to a level where any further risk would be to the upside, and enabling investors to refocus on the considerable longer-term opportunity and next-gen platform, which will be presented at Tesla’s CMD on March 1," the Deutsche Bank analysts concluded.