By Michael Elkins
Bernstein reiterated an Underperform rating and $150.00 price target on Tesla Inc (NASDAQ:TSLA) as analysts struggle to see how the EV maker can meet consensus expectations of ~2.4-2.5M units in 2024.
Last week, analysts took a high-level look at the global and regional EV market and Tesla’s market share. Historically in the EV market, newer models have typically gained share. 60% of the top 20 best-selling EV models globally in 2019 failed to grow volume in year 4, and 80% of top-selling models were launched within the last three years.
Looking forward over the next few years, analysts are seeing a massive proliferation of new models, intensifying competition in the industry. Based on IHS data, EV OEMs are expected to launch 121 new BEV models in 2023. Tesla continues to compete with just 4 models and has lost share to competitors over the last two years. However, Bernstein doesn't expect Tesla to have a new high-volume offering before 2025. Even if Tesla were to announce a new model tomorrow, analysts think it will probably take at least 1.5-2 years to ship meaningful volumes.
Analysts wrote in a note, “We believe that in the near term, Tesla is unlikely to ramp up new models fast enough to meet volume expectations in 2024, and will need to further reduce prices. Moreover, we believe that prices cuts underscore the highly competitive nature of the auto market, where sustained high margins and high volume is unprecedented, and which we believe is necessary to justify Tesla's premium valuation.”
Given the importance of new models in the EV industry, Bernstein believes Tesla faces a strategic imperative to launch a new high-volume mode. However, they believe a hypothetical new model likely will not drive meaningful volume until 2025 at the earliest.
Shares of TSLA are down 0.37% in pre-market trading on Thursday.