By Michael Elkins
Bernstein reiterated an Underperform rating and $150.00 price target on Tesla (NASDAQ:TSLA) as electric vehicle makers report 2022 numbers.
2022 was another year strong year for EV growth. Battery EVs grew ~70% from 3.8 million to 6.5 million, on top of a strong comp of ~110% in 2021. Amid an overall decline in the auto market, BEVs now account for 8.3% of total light vehicle volumes.
Despite unit growth of 40%, Tesla's BEV share actually declined from 25% in 2021 to 20% in 2022, and down ~800 bps from its peak of 28% in 2020. While part of this is a shift in global mix towards China, which Citi believes could partially reverse, Tesla also lost share in all major markets except Europe. The number of BEV models with >5K in sales increased from 223 in 2021 to 295 in 2022, with the US experiencing a 57% increase. The top 5 highest volume EVs collectively lost share in every major market in each of the last two years.
Bernstein analysts wrote in a note, “The past few weeks have served as a reminder of how difficult TSLA is to call in the short term, however, we believe that in the long term, valuation matters, and the stock is trading above our 2050 DCF value of $150/share. 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 and capture favorable economics over the longer term. As a result, the stock shrugged off a miss on margins in Q4 as the company pointed to a 1.8M volume growth target in 2023. However, 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. We maintain our Underperform rating.”
Tesla continues to guide to 50% volume CAGR over time, suggesting a target of 2.7M units in 2024. The analysts believe this will be challenging, given Citi does not expect Tesla to have a new high volume offering before 2025, and Cybertruck will likely only contribute modestly next year.
Shares of TSLA are up 3.32% in premarket trading on Thursday.