After handing over just 63,000 cars in the first quarter, Tesla expects to deliver as many as 100,000 cars in the second and four times that for the year. Hitting the full-year target is going to be a “Herculean task,” Wedbush Securities analyst Dan Ives wrote in a report Sunday, calling the issues plaguing the company a “code red situation.”
Even Ben Kallo, a longtime Tesla bull at Robert W. Baird & Co. who maintains the equivalent of a buy rating on the stock, wrote Tuesday that it may take several weeks or months for the negative narrative surrounding the carmaker to shift. He cut his price target to $340 from $400, telling clients that “credibility questions, messaging/communication and significant noise around TSLA have kept incremental buyers out of the market.”
Tesla has plummeted about 40 percent since the start of the year and on Monday breached the $200 level for the first time since December 2016. CEO Elon Musk last week called for a “ hardcore” review of all the company’s expenses to manage cash burn.
For Tesla to breathe life back into demand, it will have to aggressively expand into China, offer lower-priced SUVs and supply mobility fleets, according to Morgan Stanley’s Jonas. Trade tensions between the U.S. and China and new competitors put this strategy at risk, he said.
“We give Tesla credit for tapping into the world’s largest EV market for a number of years” in China, Jonas said. “We strongly suspect a host of national champions to emerge.”
Tesla isn’t alone in battling weaker global markets, including China. Germany’s central bank warned the nation’s auto industry -- one of the key pillars of Europe’s largest economy -- is facing more trouble as China’s slowdown deepens.
The slump, combined with U.S.-China trade tensions, comes just as incumbent carmakers are spending heavily to develop electric cars
