On Sept. 1, 2023, Tesla (TSLA) cut prices of its China-made Model 3 in the U.S. and China. That and the revamped Model 3 are likely positive catalysts that will reward investors.
Tesla will introduce the updated, pricier model to China through its Shanghai plant. At 12% more than the base model, the refresh should reignite demand. Customers get a bold redesign and better range. Those who want a bigger discount may opt for the older Model 3.
Risk
The price cuts risk pressuring Tesla’s profit margin. It is building enough supply to more than meet demand. If sales momentum weakens due to the slowing economy and higher competition, TSLA stock could weaken after its next earnings report.
In China, domestic EV makers like Nio, BYD, and XPeng are vying for market share. They will cut prices, hurting profits for all firms.
Tesla will need to develop its software further to differentiate it from the competition. Its autonomous driving software is not yet ready. In addition, the technology sector is pivoting to AI solutions. Tesla does not employ AI in its offering. Furthermore, Tesla is not close to Level 5 autonomous driving.
Watch Tesla selling ease before considering it as stock to buy.
