Suffice it to say that not everyone is a fan of Elon Musk, the CEO of electric vehicle (EV) manufacturer Tesla (NASDAQ:TSLA). Some folks would even claim that Tesla’s best days are in the rearview mirror. However, this isn’t the time to give up on TSLA stock. Tesla could make mincemeat of its rivals in the EV space over the coming years, especially with the company’s savvy pricing strategy.
I won’t deny that investing in a company means believing in its leadership. And, Musk’s headline-grabbing statements and actions involving Twitter, SpaceX and various dog-faced cryptocurrencies might cause consternation among Tesla’s prospective investors.
At the same time, Tesla is still the undisputed heavyweight champion among U.S. automakers that only manufacture EVs. Thus, it’s not too late to hitch a ride with Tesla, even if Musk has personality traits that make you think twice.
The President Might Actually Help TSLA Stock
Musk isn’t known for supporting President Joe Biden. However, the Biden administration could actually end up giving TSLA stock a boost for the long term.
I’m not just referring to the clean energy initiatives in the Inflation Reduction Act, which Biden signed off on (though these measures will undoubtedly benefit Tesla). Rather, I’m talking about the Environmental Protection Agency (EPA)’s recently proposed rules. These rules would greatly reduce the pollution that U.S. vehicles with model years 2027 through 2032 would be allowed to release into the air.
These rules aren’t currently the law of the land. However, if passed into law, the EPA’s proposed rules would constrain automakers’ ability to produce internal combustion engine (ICE) vehicles.
More than 40% of Americans already plan to make their next car an electric one. Think about how much higher that figure could be if automakers drastically reduced their output of ICE vehicles. Furthermore, Tesla would be an obvious beneficiary of the EPA’s proposed rules, as the company controls 65% of the U.S. EV market.
Tesla’s Smart Price Reduction Strategy
So, the Biden administration might inadvertently end up giving Tesla a huge gift. At the same time, the company is being proactive in firming up its leadership position in the EV market. In particular, Tesla is implementing a savvy price reduction strategy in 2023.
Tesla is crystal-clear about this strategy. The company stated that its “masterplan” involves the “transformation of cost-intensive small-series products to cheaper mass-series vehicles.” Tesla put this plan into action in January when the automaker reduced the price of its Model Y by $13,000.
More recently, Tesla doubled down on this strategy by slashing the prices of its EVs in Europe (including Germany and France), Israel and Singapore. Evidently, Musk is demonstrating clear-minded thinking as Tesla is making EV ownership more accessible globally, while also ensuring the company’s status as a popular brand among the middle class.
So, Is It Too Late to Buy Tesla Stock?
Through competitive pricing, Tesla is making it more difficult for the company’s rivals to steal Tesla’s market share. It’s ruthlessly capitalistic yet somehow eminently populist.
In other words, it’s a characteristic Musk move. Given the smart EV pricing strategy, Tesla’s shareholders should expect outstanding results over the coming months. Hence, it’s definitely not too late to buy TSLA stock. Feel free to start a small share position today, or add to your stake in Tesla if you’re already a loyal investor.
On the date of publication, David Moadel did not have (either directly or indirectly) any positions in the securities mentioned in this article. The opinions expressed in this article are those of the writer, subject to the InvestorPlace.com Publishing Guidelines.
