Deutsche Bank analysts revised Tesla’s (NASDAQ:TSLA) price target downwards to $218 from $250, while still recommending a Buy. The bank anticipates Tesla’s first-quarter deliveries and earnings to significantly fall short of current market predictions, also noting considerable risks to the consensus outlook for the full year 2024. This adjustment stems from anticipated constraints in volume growth and the impact of price reductions on profit margins.
For the first quarter, the deliveries forecast has been adjusted to 427,000 units from the previous 476,000, attributing the decrease to a combination of factors including slow Model 3 production in the US post-refresh, a gradual Cybertruck production ramp-up, and a global dip in EV demand.
The annual delivery estimate has also been reduced to approximately 1.96 million units, suggesting modest growth, in contrast to the consensus expectation of about 2.1 million. Additionally, the analysts pointed out that Tesla’s profitability might be squeezed further due to substantial price cuts announced in China and Europe earlier in the quarter, alongside more moderate price adjustments made in February.
Challenges such as the slower Model 3 ramp-up in the U.S., early factory closures, and a recent arson incident at the Berlin facility could hinder factory efficiency, while new labor costs and the introduction of the margin-dilutive Cybertruck early in the year are expected to exert additional pressure on margins, with limited prospects for recovery throughout the year.