The Future Fund LLC Managing Partner Gary Black argues that Tesla Inc. TSLA needs new vehicle form factors, rather than stripped-down versions of existing models, to achieve its targeted 20-30% volume growth in fiscal year 2025.
What Happened: Black’s analysis comes amid ongoing discussions about Tesla’s strategy for maintaining growth in an increasingly competitive electric vehicle market.
Black emphasized on X, formerly Twitter, that Tesla’s 2022-2023 price reduction strategy demonstrated that simply offering cheaper versions of the Model 3 and Model Y won’t generate sufficient growth.
Instead, he suggests Tesla needs to expand into new market segments, specifically pointing to potential offerings like a four-seat Cybercab or a Model 3 hatchback that could tap into the compact segment, which represents 12-15% of global market share.
The investor’s comments follow Tesla’s recent third-quarter earnings report, where the company posted revenue of $25.18 billion, up 8% year-over-year, though missing analyst expectations.
Tesla maintains its commitment to launching more affordable vehicles in the first half of 2025, with CEO Elon Musk linking this initiative to the company’s projected 20-30% annual volume growth.
Why It Matters: Black challenges the notion that these goals can be met through stripped-down versions of existing models, noting that Tesla needs an interim solution before the full deployment of autonomous Cybercab technology, expected in 2026.
His analysis suggests that Tesla’s strategy must extend beyond price adjustments to include new vehicle categories that can capture additional market segments.
This discussion occurs against a backdrop of increasing competition in the electric vehicle market, with Tesla facing pressure from both U.S. automakers and Chinese manufacturers.
The company’s third-quarter operating margin of 10.8% and record-low cost of goods sold per vehicle at $35,100 demonstrate its ongoing efforts to balance profitability with market expansion.
Price Action: Tesla stock closed at $345.16 on Friday, up 3.69% for the day, according to data from Benzinga Pro. In after-hours trading, the stock edged higher by 0.081%. Year to date, Tesla shares have surged 38.94%.
According to Benzinga Pro data, Tesla has a consensus price target of $232.20, with a high of $400 and a low of $24.86. Recent analyst ratings imply a 9.39% downside, with an average target of $313.
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Disclaimer: This content was partially produced with the help of AI tools and was reviewed and published by Benzinga editors.
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