Electric vehicle (EV) giant Tesla (NASDAQ:TSLA) is raising the prices for its Model Y cars in the United States and Europe by about $1,000 and $2,180 (€2,000), respectively. The price increases will be implemented in the European market on March 22 and in the U.S. on April 1. With these hikes, the company aims to boost its profit margins, which have long remained under pressure due to a price war with its rivals.
The price hike comes before the end of Q1 and is perceived as Tesla’s strategy to encourage buyers to expedite their order placements. This is expected to expand TSLA’s top-line numbers in the upcoming quarter. The company is expected to report its first-quarter earnings on April 17.
It is worth mentioning that on March 1, TSLA increased the prices of its Model Y rear-wheel drive and long-range vehicles by $1,000.
Analyst’s Opinion
Following the price increase announcement, Goldman Sachs analyst Mark Delaney reiterated a Hold rating on Tesla stock.
The analyst believes that Tesla’s Model Y and Model 3 vehicles are attractively priced at this point and qualify for tax credits under the Inflation Reduction Act (IRA). He believes that any price cuts could negatively impact profits, particularly in the short term.
Is Tesla a Good Share to Buy?
The slowdown in the EV market and intense competition keep analysts sidelined on TSLA. It has a Hold consensus rating based on 10 Buy, 18 Hold, and six Sell ratings. The analysts’ average price target on Tesla stock of $207.74 implies a 27% upside potential from current levels. Shares of the company have declined 35.1% over the past three months.
