Analysts are lowering their price targets and general expectations for Tesla as the EV giant aims to navigate out of what one called a "very messy quarter."
Guggenheim Securities' Ronald Jewsikow joined Yahoo Finance Live (video above) to discuss how Tesla has been affected by a lack of demand compared to numbers seen as recently as the fourth quarter of 2023.
As Yahoo Finance’s Pras Subramanian reported this week, Tesla in Q1 posted its first year-over-year delivery decline since 2020. Tesla reported 386,810 global deliveries, down from 423,000 vehicles in the first quarter of 2023.
Guggenheim recently reiterated a Sell rating on Tesla and lowered its price target on the stock to $122 from $132. Jewsikow said a host of factors are weighing on the EV maker across different key regions. First, the US.
"We think US volumes were down to something in the range of 20% to 25%," Jewsikow said.
And Europe and China aren't looking much better, he added.
"I was a messy first quarter," he said. "The demand is slowing, China competition is strong, and then Europe hasn't grown for five quarters now for Tesla. Structurally, there's emerging risks in all three regions that, even as we move beyond a very messy first quarter earnings result, there's reasons for concern."
As Jewsikow noted, Tesla is currently dealing with concerns from multiple angles, but he pointed to troubles in China as a key area of concern.
Indeed, several developments in China have helped weigh on the automaker's fortunes this year. Tesla announced steep price cuts in the country in early January amid more competition, but it has so far failed to see a sales boost. Deliveries in the country fell almost 20% year over year, Tesla reported in February.
"Now there's much more competition directly with the Model 3 in China," Jewsikow told Yahoo Finance. "Both from Huawei — they sold as many as Tesla did in the first quarter at very similar prices — and you referenced the Xiaomi car, the vehicle that just launched in China and I think that's a serious competitive threat to the Model 3."
In an attempt to rebound from a turbulent first quarter — and a significant tumble to start off Q2 — Tesla has announced price hikes to models in both the US and China.
Jewsikow went on to flag concerns about rumored plans for Tesla to build a billion-dollar facility in India, given that it’s already dealing with issues of abundant supply, which will likely become even more apparent once a planned Mexico-based facility is operational.
"I’m not really sure why Tesla would need another factory," Jewsikow said. "I guess if this is very long term, that makes sense, but I would be personally surprised by anything in the near term about a factory in India becoming more concrete."
Tesla stock helped lead a tech-fueled market rally on Thursday, as shares rose around 4%. But the stock is down nearly 30% this year, making it one of the worst performers in the S&P 500, which has gained over 10% so far in 2024.