Proactive Investors - Analysts at Wedbush have maintained an 'Outperform' rating and $175 price target on Tesla Inc (NASDAQ:TSLA) after a survey of Chinese consumers revealed they are responding positively to the electric vehicle (EV) maker’s recent price cuts.
In a note to clients, the analysts explained that to better decipher the many moving parts of the Tesla China story this week they conducted a proprietary survey of Chinese EV consumers living in Mainland China.
“We were able to survey over 500 consumers ready to buy an EV in 2023 over the past week,” the analysts wrote. “The results told a clear story around EV competition and the recent Tesla price cuts. Our survey found that 76% of EV Chinese consumers are considering buying a Tesla in 2023 with the nearest domestic competitors BYD in second place followed by Nio in third place.”
They added: “The big debate now on the Street is around if Tesla can battle domestic EV competition while navigating through this darker macro.”
While domestic players such as BYD, Nio, and Xpeng (NYSE:XPEV) among others are seeing strong success in China, the Wedbush analysts said Tesla remains the car of choice among EV buyers based on the survey. The unique brand, design of the Model 3/Y, and battery technology remain three core reasons that Chinese consumers are so positive about Tesla based on their research within Mainland China.
“With China representing the ‘hearts and lungs’ of the Tesla story, the continued success in this key reason is the linchpin to the Tesla bull thesis in 2023 and beyond,” they added.
One of the biggest takeaways from the survey was around the influence of the recent Model Y price cuts announced in the first week of January, the analyst said. Nearly 70% of respondents replied that the cuts have positively influenced their decision to more likely purchase a Tesla Y, proving the price cuts have been a home run success out of the gates, they added.
The Wedbush analysts concluded: "Macro headwinds clearly remain but Tesla is battling domestic players well and holding its China market share, while the recent price cuts was a smart strategic poker move paying big dividends for Tesla in China."