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Employees at the Tesla Gigafactory Berlin Brandenburg work on the final inspection of the completed Model Y electric vehicle. The Tesla factory opened and began operations on March 22, 2022.
Patrick Pruil | Picture Alliance | Getty Images
Tesla Shares traded 6% lower on Monday after the company’s quarterly shipments report warned some investors it would need further price cuts to boost sales, squeezing margins. finished.
Over the weekend, Tesla reported that it delivered 422,875 electric vehicles in the first quarter and produced 440,808. The record number represents a 4% increase in shipments from the previous quarter, following repeated price cuts in the US, China and Europe.
Some of the cuts in the U.S. were made to allow Tesla and its customers to take advantage of tax credits available under the Inflation Reduction Act. One ongoing concern, however, is that as new EVs continue to hit the market, increased competition will force automakers to keep cutting prices if they want to attract buyers.
“Many investors say Tesla’s recent price cuts reflect a structural cost advantage that puts pressure on rivals, captures outsized volumes and allows them to dominate the EV market. I believe,” Bernstein analyst Toni Sacconaghi wrote in a memo following the delivery report. “Companies are deep-pocketed and unlikely to retreat.”
Bernstein has a price target of $150, well below its current price of just over $193. “The key question for investors is what will happen to margins in the face of significant markdowns and improved commodity costs,” said Sacconaghi.
According to consensus compiled by FactSet, Tesla’s first-quarter shipments fell short of Wall Street’s expectations. However, the figures were in line with those compiled by Tesla and sent to some shareholders before the report was made public.
Analysts had expected Tesla to deliver about 432,000 vehicles in the fourth quarter, according to FactSet. Estimates he ranged from 410,000 to 451,000. An independent researcher, widely followed by Tesla fans and bulls using the @TroyTeslike handle on Twitter, expected shipments of around 427,000 units.
In an email to shareholders, Tesla said analysts expected delivery of about 421,500 vehicles, based on the consensus of 25 analysts tracked by the company.
About 2023, Tesla said it before expect It plans to produce 1.8 million cars, hinting that it plans to ship that amount. Company executives said they are aiming for an average annual growth rate of 50% in output and sales over several years.
Some analysts say further price cuts are likely to be needed to achieve this level of growth.
Vehicle inventory build-up has been a continuous trend over the past three quarters, according to Dan Levy of Barclays, which has a stock-neutral rating and a price target of $275. As it ramps up production in 2020, it “will likely require gradual price cuts,” he wrote.
— CNBC’s Michael Bloom contributed to this report
clock: CNBC’s full interview with Bernstein’s Toni Sacconaghi