Analysts at Deutsche Bank believe that Tesla’s price reductions are a “bold offensive move”

Deutsche Bank analysts have “strongly reaffirmed” their “buy” rating for Tesla Inc (NASDAQ.TSLA), following the drastic price cuts made by Tesla Inc (NASDAQ.TSLA) in North America and Europe.

The German bank’s analysts wrote to clients: “These reductions bring down US prices of most Tesla models and configurations under the IRS threshold to qualify to the $7,500 IRA EV credit; but their unprecedented size and global scope clearly reflect pressure on demand, despite deteriorating global macroeconomic conditions and increasing EV competition.”

They said: “Initial reaction from the market was to see this as a costly reactive step which will undoubtedly put considerable strain on Tesla gross margins, earnings. We believe that this is likely to be a bold offensive move which secures Tesla’s volume growth, places its traditional and electric vehicle competitors in great difficulty, and displays Tesla’s significant pricing power and cost superiority.

“Just as important, this could also be the cut that ends all cuts, helping Tesla’s 2023 estimates reset to a level where there is no further risk to the upside and enabling investors refocus on Tesla’s considerable longer-term potential and next-gen platform which will be presented to Tesla’s CMD March 1,” the Deutsche Bank analysts concluded.