Request problems and rising competitionboth at the national level and abroadweighed You’re here over the last few quarters. Shares of Elon Musk’s electric vehicle giant are now down more than 30% year to date and 58% from their 2021 all-time high. And after reporting earlier this month vehicle delivery numbers 13% below Wall Street consensus estimates, which some analysts callednightmare” quarter, the headwinds have become so fierce for Tesla that even Wall Street’s best-known bulls are starting to get nervous.
Wedbush Securities technology analyst Dan Ives, who has been a Tesla bull since he began covering the company in 2018, argued in a research note Thursday that Elon Musk and his company are going through a ” Category 5 demand storm” in the electric vehicle market.
He said Tesla is currently stuck between “two waves of growth”: the first was led by the surge in sales of premium electric vehicles, and the second is expected to come from mainstream electric vehicles and robo-taxis. But despite this speech, “patience is starting to wear thin among investors”.
This comes after Reuters reported Last week, Tesla abandoned plans to build a consumer electric vehicle worth less than $30,000 called the Model 2. Musk responded to the Reuters report in a job on Xsimply saying that “Reuters is lying(again)”, without specifying.
Amid recent demand concerns, Musk also announcement It is on April 5 that Tesla will unveil its much-vaunted Robotaxi at the end of summer. In Walter Isaacson’s 2023 book “Elon Musk,” the billionaire CEO explained how he believes robotaxis will be essential for his company. “This is the product that makes Tesla a ten trillion dollar company,” Musk said. “People will be talking about this moment a hundred years from now.”
But while Musk is set to launch his Robotaxis this year, Ives argued that they are simply “not the near-term answer to closing that growth gap,” whereas the consumer Model 2 EV is. . “It would be a risky bet if Tesla moved away from Model 2 and straight into robotaxis,” he writes.
Ives predicted that there would be no fully autonomous Robotaxis until 2030 and noted that about 60% of Tesla’s profit growth over the next few years is expected to come from the Model 2, which was supposed to hit the streets in 2025 or early 2026.
“Tesla’s future is a little murky now…Musk needs to give a clear roadmap and strategic vision for the street with Model 2 as the key element,” he wrote.
Ives said Fortune On several occasions in recent years, he often has to “hold hands” with investors when it comes to growth stocks like Tesla. He assures these nervous investors that the company’s long-term vision is intact when things go wrong and says his more pessimistic peers are overreacting to short-term problems.
But this time it’s a little different.
“Unlike other times, the Street’s criticism is justified as growth has been slow and margins showing compression, with China a horror show and increasing competition from all angles,” the analyst warned seasoned.
Ives also wasn’t the only Wall Street analyst to question Tesla’s current trajectory this week. Bank of America Research Automotive analysts, led by John Murphy, said in a research note Wednesday that Tesla is going through a “volatile period in the maturation curve” as it moves from reliance on high-end electric vehicle sales to mass market models and robots.
Murphy and his team believe that demand issues and rising inventory mean Tesla could be forced to cut prices again on its electric vehicle models unless it is able to tap into a new market, which which could lead to “increasing pressure on profits”.
“The introduction of a low-cost model (Model 2) is still far away (2026). This leaves pricing as the main lever to stimulate demand (which, we note, has not worked very well so far),” they wrote.
If the price cuts don’t help demand for Tesla juice, Murphy and company have warned that there could even be production cuts for some high-volume models this year. That would be bad news for a company like Tesla that relies on growth to justify its high valuation. As Wedbush’s Ives said: “For Musk, this is a fork in the road to get Tesla through this turbulent period, otherwise dark days may be ahead.” »
