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Bernstein: Tesla Losing Market Share to European Rivals

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Aug. 21 2019, Published 1:49 p.m. ET

As reported by CNBC, in a note to clients today, A.B. Bernstein said increased competition is weighing on Tesla’s sales. Bernstein’s senior technology analyst, Tony Sacconaghi, said, “Our analysis suggests that the deteriorating sales trajectory of the Model S and X may be primarily due to competition, particularly in Europe, from Jaguar and Audi.”

The analyst sees European luxury vehicles such as Audi E-Tron and the Jaguar I-Pace as taking market share from Tesla’s premium models. He expects further issues for Tesla due to anticipated releases from Mercedes-Benz and Porsche.

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Sacconaghi: Tesla losing share in a lukewarm European market

Sacconaghi stated that the overall demand for luxury vehicles in Europe is growing modestly while Tesla’s sales volume have declined. He added, “In other words, the market isn’t growing much, and Tesla is losing share.”

Tesla’s Europe sales jumped after the launch of Model 3 in February

The February launch of Tesla’s Model 3 in Europe increased its overall market share. Citing JATO’s analysis, TheDriven reported that Tesla had tripled its market share in a declining European market after the launch of its best-selling Model 3.

The report added, “Until February, Tesla was known for big and expensive electric cars. But the Model 3 launch allowed European consumers to access the brand’s technology and drive a pure electric modern car for less. As a result, the new Tesla became Europe’s top selling electric car in less than six months.”

According to JATO, 45,400 Tesla automobiles were registered in Europe in June. In contrast, Tesla’s total sales in 2016 were a third of this number at 15,451 units. In comparison, Europe’s overall car sales in June dropped 7.9% year-over-year.

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Bernstein’s target price and rating on Tesla

Bernstein has a “market perform” rating on Tesla stock with a target price of $325. CNBC reported that according to annual rankings from Institutional Investor magazine, Sacconaghi is usually the top tech analyst. In June 2019, Bernstein had questioned the value of Tesla’s assets.

As reported by CNBC, Bernstein discussed Tesla Q2 results, noting, “Contrary to the 11% plunge in the aftermarket, we thought Tesla’s Q2 results were fine. Not great, but not terrible either.”

Other developments for Tesla

In other significant developments for Tesla, the company received its first major acceptance certificate from the Chinese government for its Shanghai Gigafactory. You can read more about this in Tesla Gigafactory: China Provides Vital Certificate.

Yesterday, Walmart (WMT) sued Tesla, as seven Tesla solar panels on Walmart roofs allegedly caught fire. Tesla’s stock was trading down by 1.7% at 12:05 PM EDT due to Bernstein’s comments and the Walmart issue. To learn more, please read Walmart Suing Tesla for Alleged Solar Panel Fires. In contrast, the S&P 500 (SPY) was trading up 0.90%.

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