Tesla (TSLA) is starting to see its business cool off at the same time inflation seems to be moderating for another consecutive month. ARK Invest Founder and CEO Cathie Wood believes the EV maker's recent price cuts have "offset the interest rate hit" from the Fed's monetary policy while still grabbing market share from American auto companies.

Oppenheimer Senior Research Analyst Colin Rusch disagrees with some points of Wood's recent comments to Yahoo Finance.

"The landscape is changing — I don't see GM and Ford as the primary competition," Rusch explains. "We're looking at VW and Hyundai as the established OEM [original equipment manager] leaders in this space. And then companies like BYD in China is the real competition for Tesla over time."

Rusch also comments on slowing EV demand in the United States and what UAW-Big Three labor negotiations mean for Tesla.

For more expert insight and the latest market action, click here to watch this full episode of Yahoo Finance Live. Click here to see the full interview with ARK Invest's Cathie Wood.

This post was written by Luke Carberry Mogan.

Video Transcript

JULIE HYMAN: Earlier today, I had the chance to talk to Cathie Wood of ARK Invest.

Tesla is the third largest position in the ARK innovation ETF.

And I talked to Cathie a little bit about, she basically said it's positioning reasons that it's now fallen to that level.

She is still very confident in Tesla.

And I want to get you to react to what she said.

Listen up.

CATHIE WOOD: All that Tesla's price cuts have done is offset the interest rate hit.

So really, the monthly payments haven't gone anywhere.

Tesla will continue to cut prices, because it can.

Its technology costs are falling.

And it's profitable.

GM and Ford pulling away tells us Tesla's market share in our five-year investment time horizon is going to be higher than we thought.

JULIE HYMAN: So I guess the question following on that, Colin, is how is Tesla positioned versus its competitors?

All of whom are grappling with, you know, the rate environment and financing costs, et cetera.

Is Tesla in a better competitive position?

COLIN RUSCH: You know, so we think they're in a great competitive position from a technology perspective and a cost perspective.

Where we feel like it's a little bit challenged in her thesis, because she's basically arguing that they won't have to raise prices or they won't have to lower prices to stimulate incremental demand because folks are leaving the market, and we would disagree with her a little bit on that.

I think the landscape is changing.

You know, I don't see GM and Ford as the primary competition.

We're looking at VW and Hyundai as, you know, the established OEM leaders in the space.

And then companies like BYD in China is the real competition for Tesla over time.

And so the worry for us and why we're on the sidelines here is that we think margins are going to be lower for longer in a lot of folks.

And that margin expansion story that she's talking about is not going to be necessarily viable, because taking market share means putting folks out of business and taking the market share from them.

And they have to get to a price point where they're offering a better value than their competitors on existing vehicles.

And what we're seeing in the us is that adoption of EVs is just a little slow, because there is a bit of a mismatch on products and market.

JOSH LIPTON: And Colin we had some analysts on the show who were arguing, you know, the UAW getting the deal done with the big three, and some of them came on, Colin, said that was a win for non-union Tesla.

Is that what-- is that how you saw it?

COLIN RUSCH: Yeah, absolutely.

I mean, certainly, there's going to be an effort to unionize Tesla factories and all the battery factories that are serving the vehicle market.

But for now, it's certainly an advantage for them and, certainly, an advantage versus a lot of the larger internal combustion engine vehicles that are on the market.

And so, you know, that labor content ends up being, you know, a meaningful delta in terms of this price environment.

So we do see that as a as a tailwind for Tesla short term.

I think there's a much larger challenge around labor and labor pricing in this country, especially as we go into increased automation in these factories.

And I think there's going to be you know an ongoing conversation, you know, both politically but also in the business world around what's the right price for labor and what's a living wage for folks.