Tesla’s Strategy of Price Reductions to Continue, Impacting Profit Margins

According to analysts at Goldman Sachs, Tesla is continuing its series of price reductions in the electric vehicle (EV) sector, which is expected to influence the company’s profit margins. The price cuts mainly target Tesla’s Model S and Model X vehicles, and while they are predicted to impact the company’s financial performance this year, they may be partially offset by increased prices for the Model 3.

Goldman Sachs analyst Mark Delaney foresees further price cuts in 2024 as a means to boost sales volumes. These reductions are expected to counterbalance the advantage gained from cost reductions in terms of earnings per share (EPS). As a result, Goldman Sachs has revised its EPS forecasts for Tesla, lowering the projected EPS for this year from $3.00 to $2.90, and reducing the 2024 forecast from $4.25 to $4.15.

These revised forecasts align with general market expectations. According to FactSet, analysts’ consensus estimates project an EPS of $2.89 for this year and $4.50 for 2024.

Despite the adjustments in financial projections, Delaney maintains his forecast that Tesla will deliver around 2.3 million vehicles in 2024, which is an increase from the expected 1.8 million deliveries this year. This estimate is consistent with Wall Street predictions.

In terms of Tesla’s stock performance, Delaney has a Neutral rating with a 12-month target price of $275. On Monday, Tesla shares declined by 2.5% to $267.51, despite a significant increase in value over the course of this year.

In conclusion, Tesla’s strategy of implementing price reductions is expected to continue, potentially affecting the company’s profit margins. However, the forecasted increase in sales volumes and projections for future deliveries remain positive. It will be interesting to see how these factors impact Tesla’s overall financial performance in the coming years.

– Electric vehicle (EV): An automobile powered by one or more electric motors, using electrical energy stored in rechargeable batteries or another energy storage device.

– Reuters
– Goldman Sachs
– FactSet