Tesla has long sold itself as a technology firm more than an auto company. But its recent price cuts suggest otherwise, at least in the short term, analysts say.
CEO Elon Musk's decision to slash stickers in order to maintain growth and keep its new factories humming is a tactic familiar to auto industry analysts who warn Tesla's brand value may be at stake.
"These actions certainly help in the short term to increase sales volume and fend off the growing number of competitors," said Jessica Caldwell, executive director of insights at Edmunds. "In the long term, however, Tesla is walking a razor's edge between maintaining its brand prestige while simultaneously attempting to grow volume."
Musk said this month that moving metal is Tesla's top priority, given high interest rates and economic uncertainty. In the near future, he promised, Tesla will offer vehicle autonomy with software it calls Full Self-Driving, giving it a wildly profitable tech product.
But Musk has made the same promise for years.
Tesla also sells energy-storage products, solar installations and is working on a humanoid robot. But most of its profits still come from its automotive business, which is subject to economic downturns and rising interest rates.
While Tesla vehicle sales are growing in the U.S., its EV market share is falling and competitors are getting better at challenging the dominance of the Model 3 sedan and Model Y crossover, analysts say.
"Teslas are still hot must-haves, but the alternatives are getting way better and more appealing to consumers," said Robby DeGraff, insights analyst at AutoPacific.
"As such, Musk is feeling the heat of the competition as we've seen by another round of price cuts on his two highest-volume models," DeGraff said. "We're awaiting a lot of promises that Tesla hasn't delivered yet."