Morgan Stanley analyst shares bearish sentiments over high average transaction price for Model X
Tesla Motors Inc. has witnessed heat yesterday after Morgan Stanley cut their price target to $450 from $465. Due to which, the stock price began its Tuesday session in red. Since, Model X launch the Tesla’s stock has declined 7.20% against the Standard & Poor 500 Index 2.81% gain over the similar period.
Adam Jones, an analyst at Morgan Stanley is considered to be most Tesla Bull. Still after the price target reduction the firm still holds the maximum target price set for Tesla compared to all the analysts covering the stock. Mr. Jonas bearish comments are what increasing concerns amongst the company shareholders are.
Mr. Jonas has also shared his views on car manufacturer’s September 29 event, in which the company introduced its long awaited crossover SUV Model X. Analyst has appreciated the launch and its remarkable features. However, he articulated concerns regarding the expensive price.
Mr. Jonas added that the expensive Model X price increase the average price of transaction for the automaker, which might lower the orders for the vehicles. The research firm has reduced its 2016, 17 and 2018 delivery forecasts, together with this year Model X targets of delivery. The firm now expects Tesla to sell almost 1,500 Mode X vehicles in 2015, 50% of what MS has expected before the model launch.
Delivery targets like this seem conservative, but if Tesla releases cheaper variants for the SUV, the volume of delivery would not witness a major uptick. This is mainly due to the problems witnessed by the company in China are still the same. The imported EV situation in the biggest auto market of the world isn’t constructive, that has been a big issue for the company to function in China comfortably.
Tesla to sell their vehicles in China is required to join hand with Chinese manufacturers. For instance, General Motors Co. functions with SAIC Motor in China, whereas Ford Motors Co. has partnered with Jiangling Motors. Tesla Motors is also looking for domestic joint ventures in China.
Because of the headwinds pointed out by Morgan Stanley, which believes the automaker might not be able to meet its goals to put 0.5 million electric vehicles on roads by the end of 2020. The firm expects volume of nearly 287,000 vehicles by the year end, which is around 57% of what Tesla expects.
According to Tesla stock news the stock went red by 1.91% to $241.46 at market close on Tuesday.
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