share – and now studies show that the move has increased sales and market share.
(ticker: TSLA) cut vehicle prices in China as recently as Jan. 6. So Wedbush analyst Dan Ives conducted a survey of 500 Chinese electric car buyers in mainland China to measure the impact of the cuts.
“Our survey found that 76% of Chinese EV consumers are considering buying a Tesla in 2023 with the closest domestic competitors
(1211.Hong Kong) in second place followed by
) in third place,” Ives wrote in a research report.
Tesla’s market share of battery electric car sales in China is between 10% and 15%. The survey results point to some stock gains for Tesla after the company cuts prices early in 2023.
“[The] survey says about Tesla’s recent price cuts…[they’re a] huge success story so far,” added Ives. “Nearly 70% responded that recent price cuts have had a positive impact on their decision to purchase a Tesla Y, proving that the price cuts have been a runaway success out of the gates.”
There is other evidence that the Chinese price cuts have had a positive impact.
analyst Jeff Chung tracks weekly auto insurance filings in China. Nearly 13,000 Tesla vehicles were registered in the week following the Jan. 6 price cuts, up from the previous week’s registrations of about 2,100 vehicles.
It is still a little early to confirm how US price cuts are affecting new vehicle orders. Tesla cut prices in the US on January 12. Why Tesla lowered prices in the US, however, feels obvious. Research firm YipitData found that orders for new Tesla vehicles in America fell sharply at the beginning of the year.
“December 2022 order trends benefit from rebates and supercharger incentives that required delivery of the vehicle before 5 p.m. [the] end of the year,” company spokeswoman Nico Wada said in an emailed statement. YipitData found that orders in the first week of January fell about 75% compared to the last week of 2022.
The company did not report results in the week following the cuts. This data should be available soon and may shed light on how the US price cuts have affected buyer behavior in this country.
Early signs point to a similar reaction to price cuts in the US that Ives detected in China. Auto and car buying information provider Edmunds wrote that the Model Y became the most searched vehicle on its website in the week following the cuts. The Y moved up 69 places. The Model 3 moved to the 11th most searched vehicle, up 36 spots.
More buyer activity should drive more sales. 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.
However, the lower prices have resulted in lower earnings estimates. Wall Street’s consensus estimate for earnings per
In Friday trading, Tesla shares rose 15% since the Chinese rate cuts were announced. That
had increased by around 5% in the same period.
Tesla shares rose 3.1% on Friday. That
increased by 0.8%, and the
increased by 0.5 per cent.
Ives rates Tesla stock Buy. His price target for shares is $175. Overall, about 64% of analysts who cover Tesla stock price shares are buy. That average The buying rate for stocks in the S&P 500 is about 58%. The average analyst price target is about $214 per stock.
Citi’s Chung does not cover Tesla stock. He covers Chinese car manufacturers.
Write to Al Root at [email protected]