Analysts at Evercore ISI cut their target price for Tesla (NASDAQ:) shares from $155 to $145 on Sunday, shortly after the major electric vehicle (EV) maker announced financials that fell short of analysts’ forecasts. financial experts.
The investment bank identified three main challenges for TSLA.
First, Tesla appears unable to sell more than 1.7-1.9 million vehicles and it seems likely that further price cuts will be necessary. However, these may not be effective due to the inelastic nature of demand for these vehicles.
Additionally, the debut of the highly anticipated $25,000 electric vehicle and the company’s expansion plans in Mexico appear to be postponed. Tesla is now planning to introduce lower-priced models by the end of this year or early 2025, using its current production lines.
“We interpret this ‘new model’ as a different design based on the Y platform (comparable to a combination of the Models 2 and Y; perhaps with reduced production costs, an updated exterior design? More information will be provided on August 8) with a price expected average sales between $30,000 and $35,000. We fear this will not meet the high expectations of optimistic investors (our projections are for 300,000/700,000 Model 2-CUV sales in 2026/2027) regarding a surge in volumes. sales and will not have a significant impact on the critical Chinese market,” the analysts said.
Finally, analysts have warned that Tesla’s Full Self-Driving (FSD) feature, once considered a minor asset, has become increasingly central to Tesla’s valuation.
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“If Tesla’s core sales volumes cannot significantly grow beyond the current range of 1.7-1.9 million vehicles, the company’s earnings per share (EPS) projections are much lower than 2.50 dollars for the years 2025-2026. We used two different valuation methods to arrive at similar pessimistic/neutral/optimistic scenarios with a downside of $75-80, a neutral estimate of $145 and an upside between $200 and $210.”
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