Part 8/11:
Morgan Stanley’s analysis suggests that in the face of rising competition and macroeconomic pressures, Tesla may need to implement further price reductions to sustain growth and market share. The current gross margin target of at least 20% per quarter—aiming for an annual 21%—includes assumptions of successful cost management.
Interestingly, Tesla’s absence of a captive leasing subsidiary, which is rare among automakers, gives it leverage in adjusting prices without the immediate impact of residual value risks. If Tesla moves into financing, that could further stabilize margins, but currently, this strategy provides flexibility amid a challenging environment.