Tesla's cheaper 'Model Q' on the way and likely new China EV ...
Deutsche Bank is upping its price target for Tesla (TSLA) following investor meetings where Tesla revealed more about its upcoming vehicles.
While the majority of the meeting was about FSD (full self-driving), robotaxis, and Tesla’s Optimus robot, the discussion with Tesla investors and head of investor relations Travis Axelrod also covered what was coming down the product pipeline.
“The new Tesla model (we refer to as ‘Model Q’) should launch in 1H25 and will be priced <$30,000 including subsidies (i.e., $37,499 if US EV tax credit goes away),” analyst Edison Yu wrote in a note late Monday. Yu also said there will likely be other vehicles intended to increase Tesla’s TAM (total addressable market), with Yu suspecting “a 3-row longer wheelbase Model Y variant” in China.
There have also been rumors of a Tesla van for passengers and cargo, and while the cheaper EV was expected, the revelation of the Model Q name and a new Model Y variant coming to China was notable. Yu and Deutsche Bank upped their Tesla price target to $370 from $295, citing these new products and other Tesla initiatives.
Tesla stock was up 3% in midday trade, poised for a five-day winning streak.
Yu is just the latest analyst touting the growth of Tesla’s TAM due to upcoming products. Last week BofA upped its Tesla price target following a Giga Austin factory visit. Bofa said the new, cheap EV will increase Tesla’s TAM, cost less than $30,000, and benefit from a lower cost due to reduced features and cost-cutting. BofA also said it was confident more models were coming in 2025.
In addition, following its investor meeting with Axelrod, Yu wrote Tesla was confident that it would hit volume growth of 25%-30% next year, with the company touting its ability to squeeze out more production capacity in its existing factories.
A main concern has been demand for Tesla and its EVs with regards to volume growth. Goldman analyst Mark Delaney lowered his Q4 delivery estimate for Tesla, with the implication that deliveries would not grow in 2024. And last week Tesla reportedly furloughed workers temporarily on the Cybertruck line due to supply building up, as sales may have been challenged.
Nonetheless, the prospects of new products and cheaper ones, despite the potential loss of the federal tax credit in the US, has analysts like Yu and Bofa’s John Murphy bullish.
In terms of Tesla’s more ambitious projects, Yu said following the meeting that he still expects Tesla's Robotaxi testing to launch next year in California and Texas, with the use of “teleoperators” for safety purposes. When initially rolled out, Tesla will use a company-owned fleet of Robotaxis, Yu said.
