Morgan Stanley maintained an Overweight rating on Tesla (NASDAQ:TSLA) in a note Monday but said it thinks the electric vehicle giant "may be witnessing price-cut fatigue with consumers."
The firm, which also maintained a $320 per share price target on the stock, said in its note comparing the Tesla and Toyota production cuts that Tesla has used price as the primary driver to support utilization.
According to an unconfirmed report by Bloomberg, Tesla cut Shanghai factory production to 5 days per week from 6.5 days per week previously.
However, analysts think "Tesla may be witnessing price-cut fatigue with consumers (buyers' strike) and may be testing profitability levels that the company may not find acceptable."
"Such conditions may not significantly improve near-term given the age of Tesla's product line-up," wrote Morgan Stanley. "However, we prefer production cuts to price cuts to help balance supply with demand."
Today's cuts (and subsequent cost-cutting actions?) are the first signs of what analysts expect will be an eventual bottoming of consensus earnings estimates," they added. "We (and many of our clients) expect to see a big step down in consensus expectations throughout 1H24."