Tesla to report earnings as storm clouds gather around EVs
Why it matters: As the world's leading seller of premium electric vehicles — and the top EV seller in the U.S. — Tesla is uniquely exposed to sharp shifts in the marketplace.
The big picture: Tesla investors should be concerned about the prospect of further price cuts, the dilution of EV incentives, excess production capacity in China, residual values, EV fleet reductions, consumer demand and political risk, according to Morgan Stanley analyst Adam Jonas.
- "Looking ahead, are we approaching maximum market negativity on EVs?" Jonas asked in a research note. "We believe the trough may happen towards the latter part of 2024."
- Evercore ISI analyst Chris McNally wrote that he expects a "more modest tone" from CEO Elon Musk, who has long insisted that demand is not a problem for Tesla.
Keep in mind: Another overhang for Tesla shares is CEO Elon Musk's recent threat to pursue AI initiatives outside of Tesla unless he's given at least 25% control of the company.
- "Any change of organizational or legal structure that impedes Tesla's ability to participate in the development of AI could be detrimental" to the stock's potential, Jonas wrote.
What to watch for: Whether Tesla cuts its production forecast for 2024.
- Jonas lowered his 2024 Tesla production outlook from 24% growth to 15% growth, which would translate into 2.08 million vehicles.
- He also projected average transaction prices would fall by 5%, more than his previously expected decline of 3.7%.
💭 Our thought bubble: Expect analysts to press Musk on the earnings call about his demand for more control, Axios Generate's Ben Geman writes.