Swiss investment bank UBS has raised its price target on Tesla stock to $290, up from $270 previously. The firm believes Tesla’s pricing strategy is giving it a key competitive advantage in the EV market.
In a note to investors, UBS analysts led by Patrick Hummel explained the more bullish outlook:
“Tesla’s ability to offer attractive pricing could potentially provide it with a formidable competitive edge, allowing the company to expand its customer base.”
They believe the margin Tesla makes on vehicles even after recent price cuts still gives it more wiggle room on pricing compared to rivals dealing with higher operating costs.
This pricing power is a differentiator for Tesla as competition heats up, with UBS stating:
“This approach may also create challenges for competitors grappling with higher operating costs.”
While the fresh $290 price target is still below Tesla’s current trading levels above $200, it indicates growing confidence in the company’s strategy from analysts.
Tesla’s scale, vertical integration, and software-driven mindset enable a cost structure legacy automakers can’t easily replicate. And Tesla is using its advantages to aggressively lower prices and defend its dominant market share.
UBS does caution that competitors, especially from China, could retaliate against price cuts with their own adjustments. This dynamic of price competition may make it harder for all EV makers to sustain strong margins.
But Tesla has shown a willingness to trade short-term profits for strategic gains. Their mastery of OTA updates enables pricing flexibility most OEMs can’t match.
New UBS price target signals Tesla has some Wall Street doubters reconsidering in light of its demonstrated pricing flexibility. And Tesla still has room to optimize costs and expand margins long-term while keeping vehicle prices low today.