Consumer Discretionary
Q3 results exceeded expectations, sparking a 21% surge in share price, but the rally overlooks fundamental flaws, especially in TSLA’s robotaxi business. While Elon Musk envisions fares at $1 per mile with low costs of $0.2 per mile, this assumes his company will dominate the market unchallenged. In reality, TSLA faces intense competition, which could push fares down to $0.4 per mile, reducing gross margins to c.20%. The net result is that Musk is overestimating the size of the revenue opportunity by 2 or 3 orders of magnitude and TSLA’s market share by a similar amount. Richard Windsor believes the share price remains substantially overvalued.
Edition: 198
- 01 November, 2024
Consumer Discretionary
Poised for recovery - now that the dust has settled on TSLA's Q4 numbers, Ben Z. Rose of Battle Road Research sees good things on the horizon for the company and reaffirms his Buy rating. He considers the most important catalysts to be the impact of the $7,500 federal EV tax credit in the US, expansion of its Austin and Berlin factories, production ramp of the Tesla Semi with an intriguing autonomous driving twist, the launch of the long-awaited Cybertruck, and the potential for a share repurchase. Ben reaffirms his one-year price target of $316, based on a 40x multiple assigned to his 2024 EPS estimate of $7.90.
Edition: 151
- 06 January, 2023
Consumer Discretionary
Tesla China: July registrations dropped to 15-month low (-~70% m/m and -23% y/y). Signs of weakened Model 3 demand increasingly evident. After hitting a high of ~25K units in Mar ’21 (the month prior to when TSLA's controversies escalated in China) Model 3 regs have averaged ~10K over the past four months. Prices have been cut four times since Jan 2020. MIC Model Y regs were down -80% m/m and registered its second lowest monthly deliveries since Jan '21. The Model Y standard variant (newly launched on 8 July) was priced below expectations at 276,000 RMB.
SRR's data tracker for TSLA China includes insurance registrations by model and their proprietary tracking of TSLA's domestic superchargers network, pricing and lead time by model.
Edition: 117
- 20 August, 2021
Tesla (TSLA)
Consumer Discretionary
TSLA China analysis: SRR’s latest checks suggest recent controversies are taking a toll with NIO, XPeng and Volkswagen the main beneficiaries. Feedback from dealers was consistent - there has been a clear increase in cancellations and a decline in foot traffic. Prospective buyers are adopting a ‘wait and see’ approach which increases the risk for a downside surprise in registrations over the coming months. Combined with a significant narrowing of lead times for the Model 3 (1-3 weeks from 2-7) and Model Y (1-3 weeks from 3-9) leaves SRR very bearish on near-term prospects.
Edition: 111
- 28 May, 2021
Tesla (TSLA)
Consumer Discretionary
TSLA China analysis - will the recent product quality issues escalate to a level of a long-lasting scandal? Following a barrage of negative headlines at the same time as the Shanghai Auto Show was taking place (one of the most important marketing events for OEMs) the short term outlook is a concern and domestic brands look well placed to benefit. SRR will be closely monitoring the situation; conducting their own channel checks to gauge any material shifts in consumer perceptions over the coming months.
Edition: 109
- 30 April, 2021