Tesla is in 'demand hell' ahead of its Model Y unveiling, Wall Street's biggest bear says
Reuters/Bobby Yip; Business Insider/Dave Smith
- Tesla is mired in "demand hell" ahead of Thursday's Model Y unveiling, the most negative Tesla analyst on Wall Street said.
- The electric-car maker is facing waning demand in the US and China, said Vertical Group analyst Gordon Johnson, who has a $72 price target - 75% below where shares were trading Thursday.
- Other analysts have also pointed to demand as a core problem for Tesla.
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Last fall, in the throes of a turbulent stretch for the electric-car maker, Tesla was dragged from "production hell" to "delivery logistics hell," CEO Elon Musk said at the time.
"The demand is disappointing in a big way," he said. "We think they're going to lose close to $500 to $600 million this quarter due to weak demand and price cuts. We think the reason why you're seeing all this erratic activity is because we think that they're literally throwing things against a wall and hoping that they stick."Rising competition from the likes of Jaguar, Audi, and Nio's electric-vehicle offerings, falling demand, and a slowing product pipeline beyond the Model Y all fuel Johnson's bear Tesla thesis. Jaguar's I-Pace and Audi's e-tron have arrived in Europe, and Porsche's Taycan is expected to arrive by the end of 2019."Tesla has been alone in this market - 100% battery electric vehicles with over 200 miles of range," he said. "They've been alone. And the real competition arrives in the second half of this year. So that's when I think things really start to accelerate downward."
Johnson's $72 price target - implies a 75% drop from current levels, and is the lowest on Wall Street.Other analysts have also pointed to demand as a major pain point for Tesla. On Wednesday, Goldman Sachs analyst David Tamberrino said he expects weak demand and weak margins for Tesla in the first-quarter of this year while reiterating his "sell" rating.
Pointing to InsideEVs data, Tamberinno said Tesla has already seen a 66% sequential sales decline for the Model 3 during the first two months of this year. He added that the Model Y's unveiling could exacerbate demand issues for the Model 3.
Thursday evening's Model Y release comes at a chaotic time for the company as the first two and a half months of the year have been anything but quiet.Tesla has seen several high-level departures after a string of departures last year and a fresh tussle between Musk and the Securities and Exchange Commission. Additionally, the electric-car maker said it no longer plans to shutter all of its physical stores, reversing an earlier announcement.
Now read more Tesla coverage from Markets Insider and Business Insider:Tesla just laid off 150 recruitment workers as part of its broader cost cutting
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