Tesla Analyst Predicts Q1 Deliveries as Price Cuts Help Market in China, Mind Share – Tesla (NASDAQ:TSLA)

Tesla, Inc. With TSLA scheduled to report its first-quarter delivery numbers later this week, all eyes will be on whether recent price cuts across geographies lift volumes.

Tesla Analyst: Daniel Ives has an outperform rating and a $225 price target on Tesla shares, which suggests an upside of about 19% from current levels.

Tesla Thesis:

Q1 likely to outperform: Since the price cut for Model Y/3 vehicles was announced earlier this year, demand has been strong, led by the key China region, Ives said in a note. This should help the company achieve volumes of 420,000 units this quarter, he said, with deliveries likely around this week depending on logistics.

Ives said he anticipates Model Y/3 deliveries of 402,000 units and Model S/X deliveries of about 18,000 units. The mix could turn upside down for the Model Y because of price cuts in the US and China, he said.

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No Margin Hit: Analysts said they do not expect margin erosion from the price cut as the company is running behind volumes. Auto should be able to meet gross margin expectations, he said. He added that Tesla has been aggressive and strategic about pricing its Model Y/3 in China, and this has helped it snatch away both market and mind share from domestic players.

Morgan Stanley’s Adam Jonas said in a recent note that he sees a margin impact from the price cuts but acknowledged it was rational anti-competitive behavior.

Elon MuskThe analyst said the led company is on pace to register vehicle volumes of 1.8 million units in 2023, but questions remain about the balance between volumes and margins.

China’s momentum is shifting in Tesla’s favor: Wedbush sees China production at an annual run-rate of one million units with increasing scale and scope. “Domestic players like BYD Company Limited byd byddf, NIO, Inc. NiO, and Xpeng, Inc. XPEVs remain very formidable competitors, but ultimately we believe the shift in market share is now in favor of Tesla in China,” said the investment firm.

Ives said Tesla is now well positioned with its price points, with demand far outstripping supply in 2023.

Tesla Price Action: Tesla stock was up 2.38% at $193.70 at the time of publication on Wednesday, according to Benzinga Pro data.

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Source: www.benzinga.com