To stimulate demand in China.
A note from Morgan Stanley said Tesla would need to cut further prices to stimulate demand again in China.
The investment firm believes Tesla's latest price cut didn't get the job done, but it has helped more companies make cuts of their own, which is better for consumers.
However, Tesla has used price cuts in many markets, including China and the United States, to stimulate demand and make its offering more competitive compared to similar models.
Tesla has revised the prices of its cars on several occasions this year in both directions, with the biggest discounts being offered at the start of the year.
There were also cuts late last year that helped Tesla move closer to its goals for delivery in 2022.
However, when additional discounts came after the New Year, consumers were not happy and felt offended.
However, Morgan Stanley's China team said it believes this round of price cuts has not been successful due to the ongoing price war.
Volkswagen, BMW, Toyota, Ford, Nissan, and others have slashed prices in response to Tesla's discounts, which have helped the company wage war on its competitors.
Tesla still offers what it would call most of the best options in terms of electric vehicles, especially in terms of charging infrastructure.
Pricing is the only way some brands can offer an edge over Tesla, and those companies are having to adjust accordingly to keep up with demand.
Tesla saw 74,402 units sold in China last month, which is a 26 percent improvement over January.
However, Tesla made improvements to the Model 3's manufacturing line at the Shanghai Gigafactory in January, and along with the Chinese New Year, numbers for the first month of the year were poor.
\