Tesla price cuts dent other auto stocks as margin concerns rise
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Tesla (NASDAQ:TSLA) fell in early trading on Friday after unveiling significant price cuts in the U.S. and Europe. The price cuts range from 6% to 20% for Model 3, Model Y and various performance models.
Wedbush Securities analyst Dan Ives expects an initial negative reaction to the development, but thinks it is the right strategic move by the electric vehicle maker amid some cracks in demand.
"Tesla now has global scale (Austin, Berlin, further China build-out) it did not have a few years ago and has margin flexibility to make aggressive moves like this to gain further market share in this EV arms race," noted Ives.
Ives reminded that the Model Y is likely to benefit from tax credits in 2023. He also predicts the wave of price cuts could spur demand by 12% to 15% globally this year in an offensive move to grab market share.
Shares of Tesla (TSLA) fell 5.05% in early trading on Friday. The TSLA price cuts are having an impact on other auto stocks as well. General Motors (GM) declined 2.85% in the premarket session and Ford (F) dropped 3.72%. Electric vehicle upstarts Rivian Automotive (RIVN) -1.45%, Fisker (FSR) -1.37%, and Lucid Group (LCID) -1.88% were also lower.
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