Tesla’s Profits Are at Risk From Price Cuts. It Could Get Bad.

Tesla


is cutting its prices, so Wall Street is lowering its forecasts for earnings, fearing profit margins will be decimated. That makes 2023 a scary time for investors in the electric-vehicle company, although things could turn out better than feared.

Over the past week,


Tesla


(ticker: TSLA) has cut prices for its cars in both the U.S. and China. U.S. prices for some models fell by as much as 20%, as management seeks to make its cars qualify for new U.S. tax credits and prop up demand given more competition and a weakening economy. Chinese prices dropped by as much as 13%.