Think that the electric vehicle price wars have hit their peak? Not yet. Tesla (NASDAQ:TSLA) recently announced that some countries will soon see a price cut on the Tesla Model 3 and Model Y electric vehicles. The move didn’t win many friends amongst stockholders, though, as Tesla was down slightly in Friday afternoon trading.
The price cut, at least in Germany, was 5% for the Model 3 and 10% for the Model Y. Just why the cuts emerged isn’t exactly clear, though there are several factors that contribute to Tesla pricing structures worldwide. For instance, issues of government subsidies—or a lack thereof—come into play, as does competition in the region. If there are more electric vehicle makers in an area—like China—larger price cuts may emerge as a means to snag more market share.
And of course, Tesla has plenty of competition in America as well. The Model Y actually turned out to be one of America’s leading buys when it came to SUVs. It was actually one of the top three-selling SUVs, and that’s a feat given its price tag. The Model Y, according to the Detroit News, had a starting price that was better than double that of the Toyota RAV4 and the Honda CR-V. Now, with tax credits and a series of price cuts, the Tesla Model Y is on track to be a big part of America’s car buying.
Tesla itself, meanwhile, enjoys solid analyst support. Analyst consensus calls Tesla stock a Moderate Buy, with 19 Buy ratings against 10 Holds and three Sells. Plus, it comes with 18.53% upside potential thanks to its average price target of $219.57.
