Bernstein sees further Tesla price cuts in China, likely Europe

Bernstein analyst Toni Sacconaghi notes that Tesla has now cut prices by 10%-20%+ on its cars since the beginning of the year, yet the company still appears to be struggling to generate sufficient demand and the impact from price cuts has been short-lived. At its core, the firm believes that Tesla’s planned Model 3 and Y volume ambitions were "unrealistically aggressive" – somewhere around 3M to 4M units per year – or nearly about 50% global market share of their highly fragmented market segments. The upshot is that because Tesla wants to grow units at 50%, has built capacity for 2M-plus units for Model Y and 3 this year, and has no new high volume offerings coming til late 2024/2025, its main lever to achieve its goals this year is to lower prices. Bernstein sees further price cuts in China — and likely Europe — in Q2, and worries about Tesla’s ability to hit its volume targets next year without further cuts. The firm has an Underperform rating on the shares with a price target of $150.