Bernstein analyzes Tesla's addressable auto markets; reiterates Underperform  |  Author Michael Elkins

Published Mar 14, 2023 08:08AM ET

Updated Mar 14, 2023 09:04AM ET

Bernstein’s Toni Sacconaghi analyzes Tesla’s (TSLA) addressable auto markets; reiterates Underperform

By Michael Elkins

Bernstein reiterated an Underperform rating and $150.00 price target on Tesla Inc. (NASDAQ:TSLA) after the analysts completed a bottom-up analysis of the EV maker 's addressable auto markets.

IHS estimates total vehicle sales last year were ~82M units. Bernstein believes that Tesla's current addressable market is ~19M units. However, Tesla has begun selling a Semi and will begin selling Cybertruck later this year. Together, they add ~14% to Tesla's addressable market.

Bernstein analysts wrote in a note, "A key challenge for Tesla is that nearly 30% of the global light vehicle market (21M units) is sedans under $20K and SUVs under $25K (80% of which are outside the US and Europe); moreover, another 7M units (~9%) are passenger vans (where less than 7% are sold in North America). It is unclear that Tesla can (or wants to) address these market segments going forward, meaning the company's true addressable market might be closer to ~50- 60M units... requiring either 35 - 40% global auto market share (up from ~10% today) to achieve its 20M target, or for Tesla to move into very low-priced (and likely very low margin) offerings."

While Tesla's 2023 volume target of ~1.8M seems achievable, the analysts believe that Tesla will likely need to further reduce prices to hit volume expectations for 2024 and beyond.

Shares of TSLA are up 2.45% in pre-market trading on Tuesday.

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