Tesla Inc (NASDAQ:TSLA)’s decision to reduce the price of its Model 3 and Model Y products in China and add new buying incentives was not unexpected, according to analysts at Canaccord Genuity (TSX:CF), who have maintained their ‘Buy’ rating for the electric vehicle maker and price target of US$304.
After dipping below US$200 yesterday on the back of its China price cut news, Tesla stock had rebounded and was trading at about US$220 per share as of late morning on Tuesday.
In a note to clients, Canaccord analysts highlighted that they had written extensively on the apparent demand slowdown for Tesla products in China, with CEO Elon Musk also referring to it on the company’s most recent conference call as well.
READ: Tesla cuts prices for its vehicles in China by up to 9% - report
“We suspect these price cuts have been in the works for some time and do not think they are a response to incremental demand weakness over the last week or so,” analysts wrote.
They wrote that they did not expect price cuts in the US for at least some time, with the Inflation Reduction Act incentives to give some US Tesla buyers a de facto price cut soon, but they do see room for other incentives such as insurance and colors.
Looking forward, the analysts wrote that they continue to expect Tesla to deliver 450,000 vehicles in 4Q 2022.
They also noted that a key, if not the key, differentiator for Tesla over time will be its manufacturing prowess.
“While a lower-priced EV has been speculated on for some time, Mr Musk confirmed on last week's conference call that the new manufacturing platform was under development and indicated that it would lead to EVs in the $30,000 range,” they wrote. “We see the introduction of this platform as a key accelerant to EV penetration worldwide.”