Analysts at Wolfe Research outlined the main factors affecting the value of Tesla (NASDAQ:) shares in a report on Monday, indicating that the company’s prospects have improved, although there are still uncertainties.
One of the main influencing factors is the number of new vehicles delivered. Wolfe Research said that despite statements from company executives, it expects the number of vehicles delivered by Tesla in 2024 to fall to about 1.75 million, a 2% reduction from 2023 figures.
“Calculating the annual delivery rate by multiplying the first quarter deliveries by four gives an annual rate of 1.55 million vehicles. We expect that seasonal increases, particularly in China and North America, could increase this annual rate by approximately 65,000 vehicles,” the investment company explained.
Another critical factor is the reduction of production costs. The company noted that Tesla is actually reducing production costs in the first quarter of the year.
Wolfe Research also expects a steady increase in Cybertruck production, forecasting 55,000 units for 2024 and 125,000 for 2025.
“We expect pricing to remain elevated, but we do not expect the vehicle to reach a gross profit margin until the end of this year, when the production rate is expected to reach approximately 125,000 vehicles per year,” the company said. “Furthermore, in the long term, the profitability of the Cybertruck is expected to be lower than that of other Tesla products, due to the significantly higher battery capacity (123 kilowatt hours compared to around 75 kilowatt hours for other models) and a more complex manufacturing process” .
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The company expects operating expenses to remain about the same in 2024 compared to the previous year, at approximately $7.8 billion. This is due to the expected reduction in staff which balances the investment and operational costs associated with AI.
“Although Tesla’s situation seems to have improved compared to a few weeks ago (when it seemed that the company was focusing heavily on artificial intelligence and autonomous driving technology), there are still uncertainties in important areas,” commented the analysts. They also mentioned that increasing adoption rates, the introduction of full autonomous driving functions in new regions (such as Europe and China), and the initial introduction of autonomous taxi services will be critical indicators of success.
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