Thoughts and reasons behind why Tesla is cutting price
On January 6, the $Tesla Motors(TSLA)$ price cut was widely reported. There is nothing special about this, it is just a normal business practice. After the price reduction, the end consumer acceptance will be higher, which will stimulate the penetration rate of new energy vehicles to accelerate to the 50% threshold. At the same time, the lithium chain price reduction also gives Tesla some room for price reduction, which can also be interpreted as a top-down transmission of prices.
On the other hand, the industry leader to reduce prices, the other less competitive car-making new forces will be more difficult to survive, the risk of accelerated liquidation. With Tesla's price cut, the development process of new energy vehicles has officially entered the second half. Although the Tesla price war, resulting in the industry's internal volume intensified! However, from the weekend regulatory statements, new energy vehicles are an important means to stimulate the economy in 2023, the industry will continue to receive support, first from the Ministry of Commerce information, it will continue to promote the stabilization and expansion of car consumption. Therefore Tesla even if there is a price reduction, there is no customer pursuit.
Secondly, the National Energy Administration (NEA) has stated that it is vigorously promoting new energy sources, with hydrogen vehicles replacing traditional fuel vehicles. Tesla is expected to take a significant share of the new energy vehicle market with the advantage of a leading company. The last is from Guo Shuqing's speech, he called for the maximum possible conversion of current gross income into consumption and investment to encourage consumption of housing, cars and other commodities. There are lines of Tesla's sales. According to the data from the Federation, the total sales volume of new energy vehicles in China in 2022 is 6.5 million units, while the forecast for this year is 9 million units, an increase of 35% year-on-year. This is a challenging target, but given the importance of auto consumption, it feels like there are unconventional means to stimulate sales of new energy vehicles this year.
From the perspective of the new energy vehicle industry chain, Tesla's price cut is negative for the overall automotive sector, the upstream lithium ore and midstream lithium batteries are also expected to follow the price cut. The next step in the competition for electric vehicles is intelligence, and this space is relatively large, and the opportunities for integrated die-casting and driverless segments are relatively obvious. Therefore, I think Tesla will have the technical and brand advantages, the stock price is expected to stabilize first. As for the stock price to have a rise, it needs to deliver a bright report card in the next quarterly results.
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Nice