Deutsche Bank Makes a Bold Statement About Tesla's Price Cuts and Offensive Power

Deutsche Bank today made a bold statement about Tesla's recent price cuts, claiming that the move was an attempt to gain a competitive advantage in the market and was an offensive power play. Many people in the industry may not like this. However, Tesla’s price cuts may indeed be a strategic move. It even calculated how much Tesla’s massive price cuts will cost the company and I am about to tell you that.

So Deutsche Bank said "This is a bold offensive move, secures volume growth, puts its traditional & EV competitors in great difficulty, & showcases Tesla’s considerable pricing power & cost superiority; This could be the cut to end all cuts," The Investing quotes.

This is a bold statement by Deutsche Bank, who, like I said, even calculated how much Tesla’s price cuts may cost the company. Deutsche Bank calculates that Tesla’s latest pricing cuts in the U.S. alone could cost the EV company about $7 billion in profit.

I think the competition has tighter margins and cannot afford to cut price. They do not think like Tesla's purpose of making eV affordable. Doing so, improve their process. Legacy mentality will not cut it in the 4th Industrial revolution.

Referring to Tesla’s price cuts bank’s analysts wrote in a note, “Initial market reaction was to view this as a costly reactive move which will undoubtedly put considerable pressure on Tesla gross margins and earnings. Instead, we believe this likely is a bold offensive move, which secures Tesla’s volume growth, puts its traditional and EV competitors in great difficulty, and showcases Tesla’s considerable pricing power and cost superiority. Just as importantly, this could be the cut to end all cuts, helping reset Tesla’s 2023 estimates to a level where any further risk would be to the upside, and enabling investors to refocus on the considerable longer-term opportunity and next-gen platform, which will be presented at Tesla’s CMD on March 1.”

This is precisely why and where becoming the world's greatest manufacturing company is so powerful. You can simply create a much more compelling value to price equation for customers.

Overall, Tesla observers see the massive price cut in the United States and Canada as a very positive move by Tesla. This move is expected to immediately increase Tesla sales. These massive price cuts should also put Tesla way ahead of its competition. Tesla is going to a lot of pressure on the competition. Tesla can afford to make smaller margins for a long time. However, Tesla’s price cuts will greatly pressure GM and other EV makers in the US: particularly GM and VW. Ford is somewhat safe until the Cybertruck ramps.

Armen Hareyan is the founder and the Editor in Chief of Torque News. He founded TorqueNews.com in 2010, which since then has been publishing expert news and analysis about the automotive industry. He can be reached at Torque News Twitter, Facebok, Linkedin and Youtube.