According to a Morgan Stanley report, Tesla needs to further reduce its price to stimulate the demand of the Chinese market again. The company believes that Tesla’s recent price reduction measures have not completed the task, but have prompted more competitors to cut prices, which is beneficial to consumers.
Tesla has used price cuts in many markets, including China and the United States, to stimulate demand and make its products more competitive in similar models. Tesla has adjusted the price of its vehicles several times this year, sometimes rising and sometimes falling, with the largest decline at the beginning of the year. At the end of last year, there were also price reduction measures to help Tesla reach the delivery target of 2022.
Nevertheless, Morgan Stanley’s China team said that due to the ongoing price war, they believed that this round of price reduction was not so successful. Consumers expect that the price war will continue, which will lead to further price reduction in the whole industry. The company said: “We estimate that the comprehensive price war will urge consumers to maintain a wait-and-see attitude and wait for more promotions/discounts. The price elasticity of vehicle demand is falling, because consumers’ price expectations have also been falling, which may affect the sales recovery and the order volume that should have been increased in March.”
Tesla’s wholesale sales in China last month were 74402 vehicles, up more than 26% from January. Morgan Stanley reiterated its “overweight” rating on Tesla stock and its target price of $220.
Source：IThome
