Tesla stock is angling lower in 2024, falling around 30% as analysts project 2024 vehicle deliveries could undercut last year's total with profit forecasts continuing to fall ahead of first-quarter earnings.
On Monday, Tesla lowered Model Y inventory discounts in the U.S., bringing up the price on existing vehicles while also promoting the cost after the $7,500 Inflation Reduction Act (IRA) tax credit is applied. Meanwhile, news broke Monday that Tesla is laying off more than 10% of its global workforce.
With 2023 in the rearview mirror, Wall Street consensus has 2024 Tesla earnings firmly below last year's level. That signals another year of earnings declines for this growth stock. Analysts currently expect Tesla earnings per share of just $2.70 in 2024, according to FactSet. That would be more than a 13% decline vs. $3.12 in 2023.
Wall Street's 2024 EPS consensus estimates for Tesla have come down 30% since the end of 2023 and with Tesla reporting earnings on April 23, analysts are likely just beginning to cut earnings predictions.
Looking further out, Wall Street consensus has Tesla's EPS in 2025 coming in at $3.70, down from the $5.29 projection at the end of 2023, according to FactSet.
As analysts await Q1 earnings along with news around EV demand and auto gross margins, the top question for investors is always, when is it a good time to buy or sell Tesla stock.
Tesla Stock Declines In 2024
So far in 2024, Tesla stock has retreated about 30%, falling below key levels of support, as the EV giant is experiencing a difficult year after Chief Executive Elon Musk offered a tempered outlook with few specifics on Jan. 24.
Now, with Tesla reporting first-quarter earnings and revenue on April 23, analysts are bracing for more bad news.
Analysts project Q1 earnings will fall 38% to 52 cents per share with sales declining around 2% to $22.80 billion. If Tesla Q1 EPS comes in as expected, it would be the lowest quarterly level since the EV giant hit 48 cents per share in Q2 2021.
Tesla reported in early April that global first-quarter deliveries totaled 386,810 while it produced 433,371 vehicles. The deliveries included a combined 369,783 Model 3 and Model Y units along with 17,027 "other" vehicles.
Tesla's deliveries of 386,810 in Q1 undercut even the lowest estimates and marks the lowest quarterly deliveries since 344,000 in Q2 2022. Tesla blamed the first-quarter performance on issues with the production ramp up of the updated Model 3 along with factory shutdowns.
On April 10, Jefferies analyst Philippe Houchois lowered his Tesla stock price target to 165 from 185 on while Piper Sandler analyst Alexander Potter cut the firm's price target to 205 from 225.
Piper Sandler sees full-year deliveries slipping to 1.79 million. Meanwhile, Houchois expects Tesla will deliver 1.77 million vehicles in 2024, below the 2023 record of 1.81 million. The analyst also reduced his 2024 EBIT and EPS estimates by around 30% to $6.5 billion and $1.87, respectively.
Houchois added Tesla situation continues loading "more drama into Q1 results," including questions about product priorities and leadership. Jefferies also expects Q1 cash burn should be "heavily negative."
EV Demand Hitting Tesla Deliveries?
On April 9, Baird analyst Ben Kallo estimated 2024 deliveries will total 1.84 million, writing that second-quarter deliveries are likely to decline compared to last year. The consensus view is 1.94 million deliveries, according to FactSet. However, that number is likely to be adjusted following Tesla's worse-than-expected Q1 delivery result.
Meanwhile to start Q2, Tesla vehicle insurance registrations in China for the week of April 1-7 totaled 1,880, according to CnEVPost. That's down around 40% compared to last quarter and a 70% decline to the same period in 2023.
"There is no denying that the demand environment has deteriorated," Kallo wrote.
This comes after Everscore recently wrote that "Tesla increasingly is a '2027 story.'"
Tesla Stock And The Robotaxi
Wall Street was already digesting lackluster Tesla Q1 deliveries when Reuters reported on April 5 that the EV giant has canceled its long promised next-generation $25,000 vehicle, choosing to focus on developing its self-driving robotaxi platform.
Reuters, citing three anonymous sources and internal messages, wrote that Tesla no longer plans to make its low-cost entry-level vehicle, the Model 2, and will continue developing its robotaxi on the "same small-vehicle platform."
However, Elon Musk and others at Tesla have challenged the veracity of the report. Following the publication of the Reuters story, Musk also announced Tesla will unveil the robotaxi on Aug. 8.
On April 9, Morgan Stanley analyst Adam Jonas, a longtime Tesla bull, wrote that canceling or delaying the Model 2, could be a "recognition that making and selling EVs in a traditional consumer model may not create lasting economic value."
Jonas added that while the firm is prepared for Tesla to unveil a robotaxi-prototype in August, it is cautious on "potential commercialization timelines for a fully autonomous taxi service."
Morgan Stanley expects Tesla 2024 EPS to sink to $1.12.
Wedbush Securities analyst Dan Ives, a longtime Tesla bull, on April 11 wrote that while Elon Musk excited the Tesla community when he announced the company would unveil its robotaxi on Aug. 8, 2024, it is "not the answer for now." Ives added that a next-generation, low cost, Tesla vehicle is very important for the brand.
"We do not expect full autonomy (no steering wheel models) until 2030 and believe it is crucial to deliver a Model 2 vehicle over the next 18 months," Ives wrote.
"If robotaxis is viewed as the "magic model" to replace Model 2 we would view this as a debacle negative for the Tesla story," he added. "It would be a risky gamble if Tesla moved away from the Model 2 and went straight to robotaxis."
A Model 2 And A Robotaxi?
Canaccord Genuity analyst George Gianarikas wrote early on April 8 the firm does not believe Tesla has "completely scrapped its plans" and that it is modeling 100,000 next-generation vehicle units in 2026.
"Tesla is increasingly a bet on autonomy," Gianarikas said.
Troy Teslike, a respected source of delivery estimates and Tesla data tracking among retail Tesla investors, wrote on X Sunday that he wouldn't be surprised if Tesla "unveils two identical-looking vehicles" on Aug. 8.
"They might say production starts now for the robotaxi version but later for the compact car version," Teslike said.
Meanwhile, a video circulated on social media on April 7 of Franz von Holzhausen, Tesla's chief designer, being asked about the status of the Model 2 and if it has been canceled.
"Stay tuned," Holzhausen said. "Don't always believe what you read."
What Elon Musk Has Said
Tesla has long teased both its cheaper next-generation vehicle and its robotaxi ambitions.
Throughout 2023, Tesla said it continued to "make progress" on its next-generation platform. However, the EV company remained mostly silent on details about the vehicle.
In January, Tesla reported in its fourth-quarter earnings that its teams are working "on the launch of the next-generation vehicle at Gigafactory Texas" in 2024. Tesla had previously said it would first be produced in Mexico, at its new planned factory.
Tesla added in late January it is also "currently between two major growth waves," with the "global expansion" of the Model 3 and Model Y vehicle platform "and the next one we believe will be initiated by the global expansion of the next-generation vehicle platform."
"We're very far along on our next generation low-cost vehicle," Elon Musk said on the Q4 earnings call.
Musk added that Tesla was looking to start production sometime in the second half of 2025. However, Musk cautioned his words should be "taken with a grain of salt."
It's unclear if Tesla's next-gen EV will be eligible for IRA tax credits, depending on its battery sourcing. This could mean that with Tesla's current pricing, its other vehicle offerings could undercut the new "cheaper" compact vehicle.
Tesla Q4 Earnings Call Casts Long Shadow
Wall Street slashed 2024 profit projections after Tesla reported worse-than-expected fourth-quarter earnings and revenue in late January, with analyst Dan Ives summing up the conference call as a "train wreck."
Tesla reported that Q4 earnings fell 40% to 71 cents per share. Meanwhile, quarterly revenue totaled $25.17 billion, up 3.5% vs. Q4 2022. Tesla's gross profit margin came in at 17.6%, down 612 basis points.
For 2023, Tesla EPS fell 23% to $3.12 while revenue increased 19% to $96.77 billion.
"There's lots to look forward to in 2024," Musk said on the earnings call.
However, without any specifics and no word on its vehicle price cutting strategy or what way profit margins are expected to go in 2024, Wall Street has slashed profit expectations with many Tesla bulls turning bearish on the short-term outlook for TSLA.
The pessimism following Q4 came after a burst of excitement on Nov. 30, 2023 when Tesla delivered its first 12 Cybertrucks.
The EV giant is offering three trims of the Cybertruck, with the rear-wheel drive version starting at $60,990 with a 250 mile range. The all-wheel drive version has a starting price of $79,990 with 340 miles of range. Tesla is also offering a top end trim, called the Cyberbeast, starting at $99,990 with a 320 mile range.
Four years ago, Tesla announced the price would start at $39,900.
Tesla's Global Price Cutting Strategy
To maintain sales momentum in 2023 and 2024, Tesla has aggressively cut vehicle prices and offered discounts. Auto gross profit margins, excluding regulatory credits, which peaked at 30% in Q4 2021 amid industry chip shortages, have plunged well below 20%.
Morgan Stanley's Jonas believes auto gross profit margins could sink to 11.4% as the analyst foresees continued demand issues for EVs.
Tesla decided in January to trim China vehicle prices on the Model 3 and two Model Y variants and slashing Model Y prices in many European countries.
On March 1, Tesla announced big incentives for entry-variant Model 3 and Y vehicles, including insurance subsidies, cheap loan rates and more. In Europe, Tesla cut Model Y prices noticeably in several countries, amid waning sales and reduced subsidies.
However, Tesla increased its U.S. prices for all Model Y trims on April 1. Tesla raised prices on Europe Model Y vehicles on March 22. In China, Tesla hiked prices on its entire Model Y line by around $690 on April.
Before increasing the price Monday of existing Model Y vehicles, Tesla had offered large discounts on inventory Model Y vehicles in the U.S. and other markets over the past year.
Analysts have mused the April price increases were a marketing push to sell production and inventory into the end of Q1.
Days after reporting Q1 deliveries, Tesla reduced Model Y vehicle prices in Australia by more than 9% in some instances. Tesla also decided to announce 0% financing for new orders of the Model 3 and Model Y in China. The incentive runs through the end of April and is Tesla's first interest-free promotion for China, the world's biggest EV market.
Tesla Momentum, Competition In China
Tesla ended 2023 on a high in China. However, the EV dynamic in China could quickly change. Musk has said China's EV companies are Tesla's main competition — with BYD, Nio, Li Auto and others all making inroads in the EV market.
BYD, already far above Tesla EV sales including plug-in hybrids (PHEVs), overtook its U.S. rival in global BEV deliveries in the fourth quarter of 2023. Warren Buffett-backed BYD has also decided to open a plant in Europe, moving onto Tesla's turf on another continent. BYD already is building plants in Thailand and Brazil.
In Q1, Tesla sold 132,420 vehicles in China, about 34% of its global deliveries. Tesla also sold 89,064 China-made vehicles in March, including 26,666 exported, according to the China Passenger Car Association (CPCA).
Tesla vehicle sales in China last month totaled 62,398, up 107% from February but down nearly 19% compared to March 2023.
BYD continues to dominate new energy vehicle (NEV) sales in China this year, with around 37% of the market share. Tesla ranks second with a market share of 8.8%, according to CPCA data.
Meanwhile, Tesla is reportedly planning to revamp the Model Y in China with mass production beginning as early as mid-2024, according to Bloomberg. This comes after it launched a new Model 3 with a modest refresh.
But will that be enough? Chinese EV makers keep cutting prices and stepping up vehicle quality and specs.
Tesla Stock And Musk
There is never a dull moment for Tesla and Musk, with the two inextricably linked. After Musk took over Twitter on Oct. 28, 2022 purchasing the social media platform for $44 billion, some longtime Tesla stock bulls worried Musk's focus on Twitter, along with negative attention, would weigh down Tesla stock.
Musk appeared to lessen those fears when he hired Linda Yaccarino, NBCUniversal's advertising chief, as the new CEO for X Corp., formerly known as Twitter. The Tesla chief added Yaccarino will focus on business operations while he will work on product design and new technology.
At the time, Wedbush analyst Dan Ives wrote the news ends some of the "distraction risk around the Tesla story."
However, Tesla stock cut back below a key technical level early on Nov. 16, following a four-day, almost 18% rally. The pullback also came after comments made on X by Chief Executive Elon Musk in support of an antisemitic post.
Meanwhile, Elon Musk on Jan. 15 posted on X that he feels he needs more TSLA shares and voting power before making the EV giant an AI and robotics leader.
Musk wrote that he's "uncomfortable growing Tesla to be a leader in AI & robotics without having ~25% voting control." The chief executive added that he wants enough shares to be "influential but not so much that I can't be overturned."
On Feb. 3, the Wall Street Journal reported that some Tesla board members felt pressure to do drugs with Elon Musk. The in-depth report said some friends have urged him to go to rehab, and highlighted concerns that the board is not sufficiently independent from Musk. TSLA stock fell nearly 4% the first trading day after the story.
Tesla EVs In Regulators' Sights
Tesla also faces mounting pressure from regulators in 2024. A Reuters investigation found the EV giant has known of faulty suspension and steering parts across its model lineup going back at least seven years, but often blamed drivers when those parts failed.
Norway's traffic safety regulator in late 2023 confirmed it's been investigating suspension failures in Model S and X vehicles since September 2022. Sweden also announced on December 22, 2023 that it's also looking into similar issues.
This comes after a National Highway Traffic Safety Administration (NHTSA) investigation spurred Tesla to perform an over-the-air software "recall" on more than 2 million vehicles after determining that the Autopilot is prone to misuse after reviewing 1,000 accidents.
The NHTSA's Autopilot safety probe is ongoing.
Is Tesla Stock A Buy?
Tesla stock has retreated about 30% in 2024. TSLA shares have tumbled below the 50-day and 200-day lines after booking six weekly declines between late December and early February.
TSLA stock gained 3.7% to 171.05 last week, buoyed by Elon Musk's promise of a robotaxi unveiling on Aug. 8. The prior week, Tesla stock sank 6.2% and Cathie Wood purchased nearly 453,000 shares, according to the daily trade disclosures.
Meanwhile, Tesla late Friday cut the price of Supervised Full Self-Driving (FSD) to $99 a month from $199. The EV company is offering a one-month free trial of FSD for April in the U.S. for new purchases or existing EVs that are FSD capable.
Emails sent by Elon Musk leaked on social media platforms recently showing he is making it mandatory in North America to install and activate the latest version of FSD on vehicles and to take customers on a "short test ride before handing over the car."
Tesla Stock Has Plunged In 2024, But At Least It's Cheaper, Right? Nope
The EV giant ranks eighth in the 35-member IBD Auto Manufacturers industry group. The stock has a 32 Composite Rating out of a best-possible 99. The Relative Strength Rating, which tracks a stock's performance vs. the S&P 500, is at a lowly 12. Tesla stock has a 67 EPS Rating.
Almost single-handedly, Elon Musk has turned the auto industry on its head. He has essentially forced it to get aboard the electric-vehicle train. It's a reason why Tesla has been a monster stock over much of its history, especially during its stratospheric run from mid-2019 to late 2021.
Tesla stock has had mammoth runs and could again. But it's not a buy right stock now.
Please follow Kit Norton on X, formerly known as Twitter, @KitNorton for more coverage.
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