On Thursday, analysts from HSBC gave electric vehicle (EV) manufacturer Tesla a lowered price estimate. The analysts expressed concerns about excessive investor optimism and Tesla’s challenging production targets.
HSBC’s target price for Tesla is $146 per share. This is a 34 percent decrease from current prices, according to TheStreet.
HSBC analysts are skeptical that Tesla will be able to achieve its goal of manufacturing 20 million cars by 2030. Earlier this fall, Tesla announced that it’s on track to meet its 2023 target of producing 1.8 million EVs. At the same time, CEO Elon Musk conceded that Tesla’s earlier goal of increasing production by 50 percent annually might not be attainable.
Production targets are not the only area in which Tesla has been setting unrealistic expectations. Tesla has already faced multiple lawsuits for falsely advertising its Full Self-Driving software, which doesn’t actually enable autonomous driving.
Tesla is also at danger of biting off more than it can chew. The company’s major projects include full-self driving technologies, the Dojo supercomputer, and the Optimus robot. HSBC analyst Michael Tyndall believes that these initiatives face regulatory and technological challenges that will cause Tesla to incur more expenses than other automakers.
A final reason for HSBC’s pessimistic Tesla shares forecast is Tesla’s company’s extremely close connection with CEO Elon Musk. Over the last few years, Musk’s fame has brought Tesla substantial customer awareness. This awareness has boosted the company’s sales.
However, Musk’s ongoing legal issues and controversial political commentary could cause customers to dislike Musk and boycott Tesla.
This concern is borne out by market research. Last summer, a Bloomberg survey of 5,000 Tesla Model 3 owners found that disapproval of Elon Musk was the most common reason why drivers left Tesla for other brands.
Image Source: Steve Jurvetson