Investors can see the positive impact of Tesla's vehicle price cuts on its stock -- and now research shows the move has boosted sales and market share.
Tesla (ticker: TSLA) cut vehicle prices in China most recently on Jan. 6. So Wedbush analyst Dan Ives conducted a survey of 500 Chinese EV buyers in mainland China to gauge the impact of the cuts.
"Our survey found that 76% of EV Chinese consumers are considering buying a Tesla in 2023, with the nearest domestic competitors BYD [1211.Hong Kong] in second place followed by NIO [ NIO] in third place," wrote Ives is a Thursday research report.
Tesla's market share of battery-electric vehicle sales in China is between 10% and 15%. The survey results point to some share gains for Tesla after the company cut prices early in 2023.
"[The] survey says on Tesla's recent price cuts...[they're a] huge success story so far," added Ives. "Nearly 70% responded that the most recent price 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."
There is other evidence the Chinese price cuts have had a positive impact. Citi analyst Jeff Chung tracks weekly car insurance registrations in China. Almost 13,000 Tesla vehicles were registered in the week following the Jan. 6 price cuts, up from prior week registrations of about 2,100 vehicles.
It's still a little early to confirm how U.S. price cuts are impacting orders for new vehicles. Tesla cut prices in the U.S. on Jan. 12. Why Tesla cut prices in the U.S. feels obvious, though. Research firm YipitData found that orders for new Tesla vehicles in America fell sharply at the beginning of the year.
"Order trends in December 2022 benefitted from discounts and supercharger incentives that required delivery of the vehicle to occur prior to [the] end of the year," said company spokeswoman Nico Wada in an emailed statement. YipitData found that orders in the first week of January dropped roughly 75% compared with the final week of 2022.
The company didn't have results in the week following the cuts. Those data should be available soon and can shed light on how the U.S. price cuts have influenced buyer behavior in this country.
Analysts see more deliveries following the cuts. The Wall Street consensus for first-quarter deliveries is now at about 445,000 vehicles, up from about 438,000 at the start of January, according to FactSet.
The lower prices have resulted in lower earnings estimates, though. Wall Street's consensus earnings-per-share estimate for 2023 is now at about $4.80, down from about $5.50 at the start of the year.
Coming into Friday trading, Tesla stock was up 15% since Chinese price cuts were announced. The Nasdaq Composite was up about 5% over the same span.
Tesla stock was up 1.7% in premarket trading Friday. S&P 500 futures were up 0.1%. Dow Jones Industrial Average futures were down 0.1%.
Ives rates Tesla stock Buy. His price target for shares is $175. Overall, about 64% of analysts covering Tesla stock rate shares Buy. The average Buy-rating ratio for stocks in the S&P 500 is about 58%. The average analyst price target is about $214 a share.
Citi's Chung doesn't cover Tesla stock. He covers Chinese auto makers.
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