By Michael Elkins
Bernstein reiterated an Underperform rating and $150.00 price target on Tesla (NASDAQ:TSLA) ahead of the electric vehicle maker’s investor day on March 1st. Analysts believe that the most important issue for Tesla going into this event is the status of its next-gen, lower-cost vehicle platform. Bernstein has no expectation for a product announcement, but incremental detail on pricing, offering and especially timing is most important.
During its Q4 2022 earnings call, Tesla hinted that details of a new model could be revealed at its analyst day. However, a new model which is sufficiently low cost/low price to push downmarket and drive meaningful volume growth would need to be a completely new platform. Even assuming Tesla has the fully complete design, Bernstein believes it would likely take 1.5-2 years to start shipping any meaningful volume.
Tesla's March 1 investor day is expected to discuss expansion of in-house cell production, its go-to-market strategy for Cybertruck, expansion of the company's manufacturing footprint, growth of energy storage, capital allocation, and its next-gen vehicle platform.
Elon Musk has also stated that he will discuss "Master Plan 3, the path to a fully sustainable energy future for Earth". Tesla introduced its "Master Plan" in August 2006 (when it only sold the Tesla Roadster), which included a vision to build a wide range of affordable EVs and provide electric power generation options. Tesla's second master plan was unveiled in July 2016, which outlined Tesla's ambition to sell solar and energy storage, and its vision for Tesla owners to rent/share their vehicles with others as a robo-taxi.
Analysts wrote in a note, “As investor sentiment has rebounded, a new Tesla bull case has emerged arguing that Tesla has a durable structural cost advantage, which will allow it to capture outsized volume and dominate the EV market with favorable economics over the longer term. As a result, the stock shrugged off a miss on margins in Q4 as the company reiterated its 1.8M volume growth target in 2023. We believe that in the near-to-medium term, Tesla is unlikely to ramp up new models fast enough to meet volume expectations of 2.4M in 2024. Moreover, we believe that prices cuts underscore the highly competitive nature of the auto market, where sustained high margins and high volume is unprecedented, and which we believe is necessary to justify Tesla's premium valuation. While the Analyst day is likely to provide some incremental details on the next-gen vehicle platform, it is unclear that Tesla will be able to adequately address our concern around timing, and on net, we don't see the investor day likely being a catalyst for the stock.”
Shares of TSLA are up 0.61% in pre-market trading on Wednesday.