Big news hit the automotive industry when leading electric vehicle (EV) manufacturer Tesla (NASDAQ: TSLA) decided to cut the prices of its cars by as much as 20% around the world. These cuts, which affect all of Tesla's product lines, have reverberated across the industry, and shares of competitors like Ford have fallen 5% on the news.

Wall Street is likely speculating that price cuts indicate weakening consumer demand for EVs in 2023. Traditional automotive manufacturers have spent billions of dollars to bring new EV products to market in the last couple of years, so this could be poor timing for the industry as a whole.

Some investors might argue that by lowering prices, Tesla will bettto position itself in comparison with competitors betteritives the company gets from lowering costs will be heavily outweighed by the negative impact the strategy will have on its financials over the next few years. Here's why.

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Source Fool.com