Bernstein remains Bearish on Tesla (NASDAQ:TSLA) with an Underperform rating and a 12-month price target on the electric automaker of $150.00 as analysts “struggle to see a catalyst” for the company.
2023 marked a period of robust yet decelerating growth for the electric vehicle (EV) market globally, with sales of battery electric vehicles (BEVs) experiencing a 35% increase from 6.3 million to 8.2 million units. This growth, however, was notably slower compared to the impressive 65% expansion witnessed in 2022. Hybrid plug-in electric vehicles (PHEVs) outpaced their 2022 growth, increasing by 45% to reach 4 million units.
Despite the slowdown, BEVs now constitute approximately 10% of total light vehicle volumes, and when including plug-in hybrid EVs, the penetration rate reaches around 14%.
China was the primary contributor to the deceleration in growth, but still boasts an 18% EV penetration, double that of the rest of the world. Europe showed modest improvement in BEV growth, while the U.S. slowed down despite IRA credits.
Analysts note that EV adoption has more than quadrupled over the last three years with a 65% CAGR. Despite uneven growth, the BEV + PHEV sector has seen a 12x increase since 2017, with a 51% CAGR. Predictions suggest a 20%-25% CAGR through 2030, indicating potential 50%-60%+ EV penetration, though variables like subsidies, technology, geopolitics, and competition play a role.
Tesla grew units by 38% in 2023 but faced challenges. Its BEV market share held steady at 21%, down from the peak of 28% in 2020. Operating margins dropped by 750 basis points due to price cuts for volume sustainability. Tesla lost BEV market share in the U.S. (55% vs. 64%) but gained in Europe (18% vs. 15%) and maintained share in China (13%).
Analysts estimate Tesla's 2025 unit deliveries might be only half (2.2 million - 2.5 million) of its expected growth as the EV market continues to face challenges in adapting to changing dynamics, technology advancements, and heightened competition.
Shares of TSLA are up 1.68% in early trading Tuesday morning.