The Tesla Inc (NASDAQ: TSLA) stock price has risen 58.5%, driven by the company’s focus on pricing dynamics as it slashes the prices of its vehicle models to make them more affordable for potential buyers while outselling its competitors unless they can match its price cuts.
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Elon Musk’s company has been in a pricing war after drastically slashing its cars' prices at the beginning of the year to attract more buyers. The company’s CEO warned that he expects an economic recession to dampen EV demand this year since they tend to be more expensive than their ICE equivalents.
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Tesla’s strategy is working, as evidenced by the rally in its share price as investors express their confidence in the CEO’s new strategy. Elon Musk is keen to boost Tesla sales this year given the grim economic reality faced by many of its primarily middle-class buyers who have been negatively affected by the high interest rate environment.Â
The EV pioneer recently held an investor presentation outlining its strategy for the next few years, but many were disappointed by the lack of a new car. While Tesla is keen to grow its sales and vehicle deliveries, it did not unveil a new car to drive new sales. However, Tesla’s current EV lineup seems to attract sales still.
Musk’s strategy is working so far, but will Tesla remain profitable despite the lower pricing of its vehicles? The short answer is we will know when the company releases its Q1 2023 financial results. If the EV company makes a profit in Q1, its share price will likely keep rising for the rest of the year if sales remain strong.
What about Tesla’s competitors? Tesla’s competitors, such as Chinese EV company BYD, are struggling to keep up with the industry leader’s lower pricing. Unlike Tesla, they do not have a large margin of error, and their sales are not as high as Tesla's. BYD lost $18 billion of its market capitalisation as it tried to keep up with Tesla.
Tesla remains king of the EV industry, but the competition is heating up, so the firm should consider introducing new vehicle models to boost sales.
*This is not investment advice.
Tesla stock price.
The Tesla stock price has risen 58.5% this year on Musk’s new pricing strategy this year.
YOUR CAPITAL IS AT RISK. 76% OF RETAIL CFD ACCOUNTS LOSE MONEY.