In his PT cut on Tesla (NASDAQ: TSLA) today, Morgan Stanley analyst Adam Jonas weighed on the China price cuts. The analyst's colleagues in Asia recently published a note on Tesla China's price cuts for its Model 3/Y by Rmb14-37k, largely in-line with previous market expectations of not more than Rmb40k. The new starting price of Model 3/Y is 5%/9% lower at Rmb265.9k/Rmb288.9k post subsidy.

Jonas said price cuts announced by Tesla China may affect already-weak market sentiment.

The analyst commented, "While we believe luxury ICE brands are likely to be affected more, intensifying price competition could raise market concerns on the order intake of major EV names’ flagship models into the peak season. We estimate Tesla generates as much as one-half of its profitability form the Chinese market, arguably making the stock a derivative of a Chinese tech stock. The broader arc of Sino-US economic relations and the evolving geopolitical situation will continue to add volatility to Tesla shares. Our forecasts through 2030 become gradually less China-dependent, but this takes time."