Tesla Is Determined To Win In The EV Price Wars


  • Tesla, Inc. continues to show strong financial results. The company’s Q4 2022 revenue increased by 37% and EBITDA was up by 41%.
  • Lower real income is negatively affecting demand for EVs. In Q4, the company produced 8% more EVs than it managed to sell.
  • As a result, Tesla has entered a price war with other automakers, slashing 6%-20% off its prices in different markets.
  • Tesla can afford it because it has the highest dollar margin per EV compared to its competitors.
  • Despite the short-term headwinds, Tesla, Inc.’s outlook remains positive and Tesla’s financial position is strong. We see a good entry point for long-term investors right now and give a BUY rating to Tesla, Inc. stock.

Tesla Service Center. Tesla designs and manufactures the Model S electric sedan IV


Investment thesis

Tesla, Inc. (NASDAQ:TSLA) is a growth company. It is actively harnessing the power of its brand and shifting increased costs to the consumer. In 2022, Tesla was on its way to active expansion through increased electric vehicle (“EV”) production. However, 2023 likely will

With falling real income and rising interest rates on loans, Tesla is facing problems with demand. In Q4 2022, Tesla manufactured 439 700 and sold only 405 300 EVs. So, the difference between production and sales reached 7.8%, accelerating compared to Q3 2022 (6%).

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Especially since Tesla has almost doubled its production capacity in 2022 and is ready to produce up to 1.9 million EVs per year.


Tesla has one of the most stable positions in this sector due to its high dollar margin per EV.

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We have revised our 2023 Tesla revenue forecast downwards from $134.8 bn (+65% YoY) to 123.8 bn (+52% YoY) due to introduction of EV discounts (6%-20%) and a greater-than-expected shift in demand towards the Model Y.

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We have also revised downwards our 2023 Tesla EBITDA forecast from $31.5 bn (+81% YoY) to $17.1 bn (-2% YoY) due to lower revenue projections and downward revision of 2023 gross margin forecast from 28% to 17% because of margin discounting pressure on the company. We have revised our 2025 EBITDA forecast downwards from $109.3 bn to $81.8 bn due to greater shift in demand towards the Model Y, which is less profitable.

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Based on the new assumptions, we give a BUY rating to the stock. The upside from the current price is 140%.

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Disclosure: I/we have no stock, option or similar derivative position in any of the companies mentioned, and no plans to initiate any such positions within the next 72 hours. I wrote this article myself, and it expresses my own opinions. I am not receiving compensation for it (other than from Seeking Alpha). I have no business relationship with any company whose stock is mentioned in this article.

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