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Tesla ramps up EV price war with new model; Bullish for TSLA stock?

Tesla ramps up EV price war with new model; Bullish for TSLA stock?

While the electric vehicle (EV) market has been experiencing significant growth in recent years, high interest rates, financial instability, and the continuously-increasing cost of living have all had a negative effect on demand. 

In response, many manufacturers, including Elon Musk’s Tesla (NASDAQ: TSLA), have kicked off 2023 with a series of significant price reductions effectively starting an EV price war.

Tesla, long considered a leader when it comes to electric cars, might soon further sharpen its edge over competitors in the EV market as it prepares to start production on a new model set to cost €25,000 – just under $27,000 at the time of publication – according to a Reuters report from November 6.

The new car is set to be produced in the carmaker’s German gigafactory located near Berlin. The report comes only months after it was revealed that Tesla is close to a breakthrough that would enable it to significantly streamline the production of its vehicles.

Will the €25,000 car send TSLA soaring?

Considering that the new model is allegedly approximately $10,000 cheaper than Tesla’s least expensive currently available car, it is likely to significantly increase the EV maker’s market share. Should this be the case, Elon Musk’s company might finally find a major advantage over its largest competitors.

The development could also provide Tesla with the means of beating China’s BYD (HKEX: 1211) which outsold it in 2023 by slightly more than 300,000 vehicles, according to data from September. The new car could also broaden the company’s lead against premium EV manufacturers like Lucid Motors (NASDAQ: LCID) which started offering $10,000 cashback on new purchases last week due to low demand.

It could also drastically bolster the bull case for Tesla as the successful production of an electric car for €25,000 would not only offer a chance to end the streak of worse-than-expected quarterly reports but also again solidify the company as a major manufacturing innovator.

While such a development would almost certainly cause Tesla’s stock to soar, it is important to note that it isn’t the only possible outcome. For starters, the production of the car hasn’t yet been officially confirmed nor is it known when exactly it will roll off the assembly lines. 

Additionally, it is hard to tell whether a new model will boost sales before the model is actually unveiled as it might suffer from technical issues or be poorly received for some other reason significantly dampening its selling potential.

TSLA price chart analysis

No matter what the potential €25,000 model might bring to the table, Tesla’s stock has been performing rather well since the start of November. At the previous close, it stood at $219.96 meaning it rose by about 0.66% on Friday. 

Tesla has also been slowly rising in the pre-market on Monday, November 6, and is up to $225.41 at the time of publication – a 2.48% increase over the weekend. 

TSLA 1-day price chart. Source: Finbold

Still, it is important to remember that Tesla’s performance over the previous month has been somewhat disappointing – primarily due to its most recent earnings report – and TSLA has overall declined nearly 16% since early October.

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Disclaimer: The content on this site should not be considered investment advice. Investing is speculative. When investing, your capital is at risk.

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