Analyst Predicts Tesla’s Rocky Road to Growth

Tesla, the leading electric vehicle (EV) manufacturer, may be faced with a bumpy road ahead. Senior Research Analyst at Bernstein, Toni Sacconaghi, suggests that the automaker might be compelled to decrease its car prices yet again to stimulate demand, given the lack of new models in the pipeline this year.

Speaking to CNBC, Sacconaghi offered his perspective, stating, “upcoming numbers won’t be great,” citing a limited chance for Tesla to surpass expected delivery figures this quarter. He predicts a fall in margins due to price cuts implemented during this period.

Sacconaghi further warned that Tesla could encounter supply-side issues without any fresh car releases, necessitating more price reductions to boost demand. He added, “that’s our concern, that Tesla will ultimately fall short on deliveries at some point over the next four to six quarters, or that we’re going to see continued price cuts to be able to drive that growth.”

Tesla, under Elon Musk’s leadership, has already made waves in the market by engaging in a price war with rivals such as Ford and GM, reducing the prices of its EV models six times this year. Tesla’s aggressive pricing strategy has made its Model Y cars more affordable than ever, at $47,740, which is below the average car price in the US.

While these price reductions have increased demand, demonstrated by a 36% surge in first-quarter deliveries, they are concurrently eating into Tesla’s profits. Investors are growing wary that the car manufacturer may be compromising its profit margins to amplify volume.

However, not all seems gloomy for Tesla. Despite the concerns, the company’s shares have made substantial gains this quarter, spurred by enthusiasm over its charging agreements with Ford and GM.