Wall Street's outlook for Tesla Inc. is gradually becoming bleak, with at least two analysts becoming more cautious about the electric vehicle manufacturer within two days.
Analysts say that by 2024, some electric vehicles produced by Tesla may no longer be eligible for government subsidies from the United States and some European countries, which will put further pressure on the company's revenue as demand for these vehicles has slowed down.
Tudor, Pickering, Holt& Analyst Matt Portillo from Co. wrote in a report on Tuesday, "If Tesla continues to strive for growth next year, losing these incentives may further increase the risk of its price cuts. I expect Tesla's delivery volume in the last three months of 2023 to be lower than analysts' average expectations."
The latest pessimistic comments from analysts further indicate that Wall Street's view on Tesla's performance is deteriorating. According to data collected by the media, analysts' average forecast for Tesla's fourth quarter profit has decreased by 55% compared to 12 months ago, while their forecast for 2024 profit has decreased by 43%.
The data also shows that in terms of sales, analysts have predicted an average of over 481000 Tesla deliveries in the fourth quarter. Portillo's forecast is about 470000 vehicles, and its rating for the stock is sell. RBC Capital Markets analyst Tom Narayan predicts around 476000 vehicles, giving the stock a buy rating.
On Monday, Narayan lowered its delivery expectations for Tesla in 2024 and 2025 to reflect "moderate growth" in Model 3 and Model Y sales, and pointed out unfavorable factors such as intensified competition and loss of federal incentives. He said that some models of Tesla's mass market Model 3 will lose full federal tax credits next year.
Tudor's Portillo said that the company may also face similar problems in France and Germany. After Tesla released its first performance warning for the third quarter in October, it is widely expected that demand in the entire electric vehicle industry will slow down. In addition, these subsidy issues will also arise.
After these warnings, veteran car companies such as General Motors, Ford, and rental car company Hertz Global Holdings Inc. have also made similar pessimistic predictions about electric vehicles.
A large part of the overall weakness of electric vehicles is that pioneers who are willing to pay for new technologies may have already bought them, while mainstream buyers remain cautious about high prices and the emerging electric vehicle ecosystem.
Cowen analyst Jeffrey Osborne wrote in the latest report, "Since 2022, the average price of new electric vehicles has decreased by about 21%, but consumers still hesitate to purchase electric vehicles. Most people believe that battery reliability still needs to be improved, the lack of available public charging stations, and the long time required for complete charging are the main obstacles they cannot overcome."
Therefore, for Tesla, which only sells electric vehicles, the profit and revenue expectations given by analysts have been declining. Portillo and Narayan's concerns about next year are not isolated.
Last Friday, Deutsche Bank analyst Emmanuel Rosner said that when the penetration rate of electric vehicles slowed down, Tesla faced a "greater risk" that the growth and profitability in 2024 might be lower than expected.