The firm suggested that the electric automaker take one of two strategies to regain its momentum. Bank of America (BoA) reduced its price target on Tesla by more than 20 percent, from $280 to $220, while maintaining a ‘Neutral’ rating on the automaker’s shares. One of the strategies is already in development, while the other is a more flexible option.
BoA also mentioned the possibility of price cuts as a potential move to boost demand, but warned that this could impact Tesla’s profit margins, a concern for some bullish analysts. BoA emphasized that pricing is the primary lever to spur demand, although it acknowledged that this approach has not been particularly effective thus far. Addressing the importance of volume growth as a priority for the company, BoA implied that further price discounts may be on the horizon.
As of 2:42 p.m. EDT, Tesla shares were trading at $171.30.