Not really getting better for Tesla, says Bernstein

Bernstein analyst Toni Sacconaghi notes Tesla’s Q2 results were mixed, with in line revenues and EPS beat, largely due to a large non-operating gain. That said, auto gross margins were 70 bps below consensus and down 90 bps sequentially to 18.1% despite a material sequential benefit from IRA credits, and free cash flow was well below consensus. While Tesla is increasingly exploring other demand creation levers besides MSRP cuts, Bernstein continues to believe that the company will need to further lower prices this year and/or next year to achieve its volume targets, incrementally pressuring margins. The firm also doesn’t expect Tesla’s next generation platform to ship in volume before 2025, and believes it will be dilutive to margins. Bernstein has an Underperform rating on the shares with a price target of $150.