Tesla, one of the leading companies in the electric vehicle (EV) industry, experienced a decline in its stock price on Thursday, extending its year-to-date drop to nearly 30%. This significant decrease has positioned Tesla as one of the worst performers in the S&P 500 for the year 2024.
The decline in Tesla’s stock is primarily attributed to two key factors, as highlighted by Citi equity analysts. Firstly, the launch of Xiaomi’s SU7 electric vehicle series in China has raised concerns about intensified competition in the EV market. Xiaomi’s competitive pricing range for the SU7 series, along with the addition of the SU7 Pro edition, poses a potential threat to Tesla’s market position in the region.
Additionally, ongoing worries about Tesla’s first-quarter delivery estimates have further contributed to the negative sentiment among investors. Several Wall Street analysts have reduced their delivery estimates for Tesla, impacting the company’s stock performance.
In response to these concerns, Deutsche Bank analysts have lowered the price target on Tesla’s stock, citing pressure on margins and earnings due to price cuts aimed at stimulating vehicle purchases.
Despite the short-term challenges faced by Tesla, Citi analysts view this as an opportunity to highlight the undervalued potential within the traditional automotive sector. They particularly emphasize the value of GM’s and Ford’s NA Truck/Commercial franchises, which showcase strong growth and defensive qualities.
In conclusion, while Tesla’s stock faces immediate challenges, it also underscores broader discussions about competition in the EV market and the potential for growth within the automotive industry as a whole.
