Market expectations too high? Wall Street investment banks warn: Tesla's next growth phase may still take several years.
Tesla is planning to launch a new, more affordable electric vehicle to drive future growth. However, analysts at the investment bank Evercore believe that the implementation of this plan may take a considerable amount of time, and the new model has not yet gained widespread market acceptance.
On Monday, March 11th, Evercore analysts, including Chris McNally, expressed cautious expectations for Tesla's future growth after visiting Tesla's factory in Texas, USA.
They believe that it may take several more years for Tesla to fully launch the new low-cost model, commonly referred to as "Model 2," than what Wall Street currently expects.
Moreover, they have conservative sales expectations for Tesla's new models, questioning that even in the best-case scenario, by 2026, Model 2's sales may only reach 500,000 units, instead of the widely expected over 1 million units.
McNally stated:
"The next growth period for Tesla may not occur until after the successful launch of the new model in 2027, rather than sooner."
Despite Tesla's stock price rising by 310% since 2020, analyst McNally, who has covered the stock since January of that year, has never given a "buy" rating, currently rating it as "hold." Evercore forecasts Tesla's deliveries in 2026 to reach around 2.7 million units, with earnings per share in 2026 expected to be 18% to 20% lower than market expectations.
Tesla CEO Musk has mentioned that Tesla is between two major growth waves, with the first wave supported by the Model 3 sedan and Model Y SUV, and the second wave expected to come from the more affordable next-generation electric vehicles.
It is reported that Tesla plans to start production of this new electric vehicle at its Austin factory by the end of 2025. McNally predicts that the material cost of this new model will decrease from $28,000 to $20,000, with a range of approximately 250 miles and no glass roof.
McNally pointed out that a "major debate" will be whether Tesla's driving assistance hardware will become a standard feature. His team believes that the cost of this hardware could range from $2,000 to $3,000. If Tesla decides to include these advanced driving assistance systems as standard, it may increase the cost of the vehicles.
Despite the overnight performance of Tesla's stock not being affected by the investment bank's report on Monday, with the stock outperforming the broader US market, rising by about 4% at one point, reaching a high of $182.87. Although the overnight stock performance was impressive, on the daily chart, the stock price remains within a stable range over the past five trading days, around $173.70 (the intraday low since May 2023).