As you may be aware, electric vehicle (EV) manufacturer Tesla (NASDAQ:TSLA) has announced a series of price cuts in recent months. Even if short-term TSLA stock traders didn’t seem to appreciate the company’s strategy at first, the tide of sentiment appears to be shifting. Now is a great time to start a share position in Tesla, as the automaker’s focus on selling more vehicles at lower prices should pay off in the long run.

Tesla has been a controversial company from the outset. Perpetuating an EV price war is another bold move for Tesla, and certainly, some onlookers are skeptical.

Yet, Tesla’s bold bet on reduced-price EVs is already having an impact not only on Tesla but on its rivals as well. Financial traders are starting to see the results, but the full impact of Tesla’s price war is likely to have ripple effects for years. If you’re on board with this, then you can buy a few shares of Tesla stock today and watch them gain value over the long term.

TSLA Stock Traders React to Declining Profit Margin

Admittedly, not everyone’s on board with Tesla’s tactics. Some critics might point out that Tesla has actually hiked the prices of some of the company’s vehicles. Here’s the breakdown: in four countries, Tesla raised its Model Y and Model 3 model prices by up to $290. Also, in China, Tesla’s new Model S and Model X units will cost the consumer an extra 19,000 yuan, which equates to $2,751.

Yet, in the final analysis, these are relatively small price increases. But Tesla has undoubtedly started a global EV price war. This has benefited consumers by making clean-energy vehicles more affordable, and it’s a brilliant way to attract reluctant EV buyers.

Still, it’s a controversial strategy that didn’t impress Wall Street at first. Tesla stock actually fell 9.8% after the automaker released its first-quarter 2023 results. This might seem irrational, as Tesla’s total automotive revenue grew 18% year-over-year. However, Tesla’s total GAAP gross margin shrank from 29.1% in the year-earlier quarter to 19.3% in Q1 of 2023.

Tesla’s Backlog of Model 3 Orders Is Bullish

Make no mistake about it: Tesla is still committed to reasonably priced EVs. It’s reportedly now possible to buy a Tesla Model 3 for just $47,240, which represents a 18.5% discount compared to the price of that model in August of last year.

This is undoubtedly part of a larger plan. Clearly, Tesla is prepared to sacrifice its profit margins in the short term. The payoff is, and will continue to be, a boost to EV sales. Moreover, in the long run, Tesla should be able to invest its revenue into the company’s future growth. As CEO Elon Musk explained, “It’s better to shift a large number of cars at lower margin and harvest that margin in the future as we perfect autonomy.”

Tesla’s tactics are already taking a toll on the company’s rivals, it seems. For example, Ford (NYSE:F) is reluctantly cutting the prices of some of its vehicles. Looking ahead, Piper Sandler analyst Alexander Potter expects that Tesla “may cut prices further.” I wouldn’t be surprised at all if Tesla does, indeed, reduce its EV prices throughout the year. This would put tremendous pressure on Tesla’s rivals, while also keeping Tesla’s customers happy.

Perhaps the best evidence of Tesla’s success, though, is the company’s backlog of Model 3 orders. Believe it or not, the supply-and-demand balance was so lopsided that Tesla temporarily stopped taking Model 3 orders. Musk stated at the time, “Waitlist is too long. Will enable again as we ramp production.” That’s not such a terrible problem for Tesla to have, you must admit.

So, Is It Too Late to Buy Tesla Stock?

All in all, I’d claim it’s smart for Tesla to sacrifice its profit margins temporarily in pursuit of higher sales and market share. This is a tactic that will play out over the coming months and years. So, it’s definitely not too late to start a long position in Tesla stock.

Going forward, Tesla should be able to invest future initiatives with its robust revenue. In particular, Tesla can advance self-driving vehicle technology.

Over time, the company’s profit margins should recover. Meanwhile, Tesla can put pressure on its competitors by offering affordable EVs. This is all bullish for TSLA stock, so don’t hesitate to give it a try today.

On the date of publication, David Moadel did not have (either directly or indirectly) any positions in the securities mentioned in this article. The opinions expressed in this article are those of the writer, subject to the InvestorPlace.com Publishing Guidelines.