Not-So-Bright Future for Tesla in 2024, According to Wall Street Analysts

Wall Street’s outlook on Tesla is quickly darkening, with at least two analysts adopting a cautious stance towards the company recently, according to a report by The Detroit News on December 19, 2023. They suggest that some of Tesla’s models will no longer qualify for government subsidies in the U.S. and some European countries by 2024, potentially adding pressure to the company’s earnings in a situation where demand for these cars is already expected to slow.

This follows Tesla’s already slowing performance in the fourth quarter of 2023, indicating a negative sentiment on Wall Street. Bloomberg reports that the average fourth-quarter earnings forecast for Tesla among analysts has dropped by more than 55% compared to 12 months ago, and the 2024 earnings expectation has fallen 43% over the same period.

According to Bloomberg data, analysts anticipate Tesla’s fourth-quarter sales to average 480,100 units, although some analysts predict a lower figure of 470,000 units. They have also lowered their delivery estimates for Tesla in 2024 and 2025. The most significant impact comes from Model 3, which will no longer qualify for the IRA tax deduction in the U.S. starting in 2024.

Furthermore, while the average price of new battery electric vehicles has dropped about 21% since 2022, consumers continue to express concerns about battery reliability, the lack of available public charging stations, and the time it takes to fully charge, which are key factors in their reluctance to make the switch.

This backdrop sets the stage for a downward revision of estimates concerning Tesla’s earnings and revenue, as the company exclusively specializes in electric vehicles. The prevailing consensus regarding Tesla’s prospects for the upcoming year, despite its stock experiencing a 108% surge this year, suggests that it may face challenges and is expected to underperform. These challenges encompass a range of headwinds, including the impact of elevated interest rates, as previously acknowledged by Elon Musk. These factors are already widely recognized and acknowledged within the industry.