The xEV market, which includes both battery electric vehicles (BEVs) and plug-in hybrid electric vehicles (PHEVs), experienced a 21% year-over-year growth in the first half of 2024, although this pace is slightly slower than in previous years. Notably, PHEV sales surged by 49%, while BEVs saw a more modest 9% increase. Meanwhile, China is leading the charge with a 30% growth in xEV sales, but the rest of the world has seen meaningful deceleration.
“Against this backdrop,” says Bernstein analyst Toni Sacconaghi, “competition has heightened (BEV models now amount to nearly 200 globally), and ASPs (average selling prices) have fallen notably.”
The implications for Tesla (NASDAQ:TSLA) appear to be particularly worrying, with the ASPs for its vehicles dropping by nearly 10%-20% year-over-year. Moreover, Tesla has lost market share across all geographies and vehicle categories. This decline is most pronounced in North America, where Tesla’s market dominance in the second half of 2019 and 2020, with a 77% share, has eroded to 48% in the first half of 2024, though it still leads the field. Since 2019, Tesla’s overall xEV market share has steadily decreased, falling from 17.5% to 12%.
The problem for Tesla is that EV competition is only set to become more intense. The number of BEV models with sales exceeding 5,000 units saw an additional 8% uptick from 182 in 2023 to 196 in the first half of 2024, following 25.5% growth from 145 in 2022.
While Sacconaghi acknowledges that predicting Tesla’s short-term stock performance is challenging –especially with events like the October Robotaxi announcement, which he believes will be “long on vision and short on deliverable product” – he remains bearish on the company’s automotive fundamentals, which show no signs of improvement.
“We don’t believe that Tesla will be able to regain share or grow materially until it launches all new, lower priced offerings – likely only in 2026 and 2027 – and believe the company’s valuation is increasingly disconnected from prevailing fundamentals,” Sacconaghi summed up.
All told, Sacconaghi rates TSLA shares as Underperform (i.e., Sell), while his $120 price target suggests the stock will tumble 46% in the year ahead. (To monitor Sacconaghi’s track record, click here)
Among Sacconaghi’s colleagues, 6 other analysts join him in the bear camp, while 10 recommend a Buy. However, the majority – 14 in total – remain on the fence with Hold ratings, making the consensus view on TSLA a Hold. The average price target stands at $211.46, implying the shares will drop 5% from current levels. (See Tesla stock forecast)
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Disclaimer: The opinions expressed in this article are solely those of the featured analyst. The content is intended to be used for informational purposes only. It is very important to do your own analysis before making any investment.
