Electric vehicle giant Tesla (NASDAQ: TSLA) hit its target of 1.8 million vehicle deliveries in 2022, according to recent company data. However, analysts at Deutsche Bank warn of “large downside risk” to earnings expectations in 2024 amid projected volume declines, pricing pressures, potential Cybertruck margin impacts, and high tax rates in China.
Tesla delivered approximately 485,000 vehicles globally in Q4 2022. This consisted of 462,000 Model 3 and Y vehicles, along with 23,000 Model S and Model X units plus some early Cybertruck deliveries. With total 2022 deliveries reaching 1.8 million, Tesla achieved its stated annual target and cleared market expectations for both Q4 and full-year volumes.
Nonetheless, Deutsche Bank maintains a cautious outlook on near-term earnings potential. Analysts forecast Tesla’s 2024 deliveries guidance could drop to only 2.1 million vehicles, moving away from the company’s long-held 50% compound annual growth rate target. Ongoing economic instability, inflationary pressures, and rising interest rates may dampen consumer demand.
Additionally, the bank highlights risks from weakened pricing power in a potentially oversupplied EV market. The influx of new competitors across vehicle segments threatens to erode Tesla’s premium pricing advantage. Deutsche Bank also notes the unknown cost structure and margin profile of the eagerly anticipated Cybertruck as an uncertainty on profitability.
On top of these operational challenges, Tesla faces the headwind of elevated tax rates in China – a crucial growth market. Combined with slowing regional demand, this creates further downside risks to earnings there.
While acknowledging near-term concerns, Deutsche Bank maintains a Buy rating on Tesla with a 12-month price target of $260 per share. Analysts highlight the company’s next generation vehicle platform and future Gigafactory Texas production as long-term opportunities.
Tesla CEO Elon Musk suggested advanced versions of upcoming models would initially be manufactured in Texas. Future facilities in Mexico could add supplemental production capacity. Introduction timing for these next-generation vehicles remains fluid, but technology leapfrogging keeps Tesla well-positioned strategically.
Deutsche Bank recently upwardly revised its Q4 2022 EPS estimate for Tesla to $0.74, aligning with consensus expectations. For full-year 2023, the bank forecasts EPS of $3.15 – reflecting tempered growth projections but still implying a healthy profit margin.
Despite recent stock gains, Tesla shed early morning gains in Wednesday pre-market trading on the latest analyst commentary. With caution spreading on 2024 output and earnings, the company still aims to pioneer the future of sustainable transport.
