Tesla Inc. Faces Tense Times as Demand in China Weakens
Wedbush, a prominent financial firm, warned investors on Thursday that Tesla Inc. is currently navigating through dangerously tense times as demand in China remains weak. This is expected to have a significant impact on the electric car maker’s first-quarter delivery data, which is due to be released in the coming days.
Dan Ives, a long-time bullish analyst on Tesla, described the first quarter as a “nightmare” for the company due to a perfect storm of demand issues. This has led to a sharp cut in average market expectations for Tesla’s performance in the first quarter.
The average estimate from a FactSet survey suggests that Tesla is likely to deliver 457,000 electric vehicles in the first quarter, an increase from 423,000 in the same period last year. However, this figure is lower than the 494,000 vehicles that were initially expected at the beginning of the year.
While supply-side issues such as factory shutdowns and the recent factory fire in Berlin have impacted vehicle supply, Ives acknowledged that the first quarter has been challenging for CEO Elon Musk and Tesla as a whole.
Wedbush reiterated its outperform rating on Tesla stock but lowered its price target to $300 from $315, which still represents a significant increase above the current stock price.
Ives highlighted other challenges faced by Tesla in the first quarter, including upgrades for the Model 3 Highland and lackluster sales in Europe. However, he emphasized that the biggest challenge for the company lies in China, where competition is intensifying and price wars are ongoing.
Wedbush now expects Tesla’s first-quarter deliveries in China to decline by 3% to 4% year-on-year. Ives anticipates the release of this data next Tuesday, warning that it will be a difficult quarter for Tesla investors.
Despite the current challenges, Wedbush remains optimistic about Tesla’s future in the electric vehicle market. However, Ives stressed the importance of Musk addressing key issues such as margins, China strategies, and oversight concerns to regain investors’ confidence and navigate through this turbulent period.
In the long run, Wedbush believes that Tesla can maintain its dominant position in the electric vehicle market, but the company must successfully navigate through the current difficulties to secure its future success.