(Reuters) – Tesla fell about 2% on Wednesday after a widely watched analyst at Morgan Stanley lowered his price target on the stock, saying that electric-vehicle demand was continuing to weaken in key markets including China despite hefty price cuts.
Demand has taken a hit in the past year as high interest rates force consumers to rethink big-ticket purchases such as electric vehicles, adding to the existing concerns around EV charging and battery range.
Even though it has been more than a year since Tesla started lowering prices to spur demand, the company in January forecast “notably lower” deliveries growth this year.
“Tesla’s product line-up might be the oldest among any major automakers and price cuts would persist in China … this year as it is over-supplied,” Morgan Stanley analyst Adam Jonas said, after cutting the price target on Tesla’s shares to $320 from $345.
The stock fell as much as 3.8% in early trading on Wednesday, hitting a near 8-month low.
Most of Tesla’s aging lineup of car models was introduced before the pandemic, with the exception of a styling and feature refresh of the Model 3 compact sedan last year.
Tesla’s first-quarter deliveries are also likely to be weighed down by Red Sea attacks-driven supply chain disruptions, suspected arson at its Berlin factory and downtime at its California plant to prepare for the production of the new Model 3, analysts have said.
“A series of one-time production disruptions added further complexity to the setup for Q1,” Baird Equity Research analyst Ben Kallo said.
Tesla’s shares have lost more than 56% of their value since November 2021, hit by intensifying competition, especially with Chinese automakers in one of its biggest markets.
Still, the company, valued at about $576 billion at Tuesday’s close, is the world’s most valuable automaker.
(Reporting by Akash Sriram in Bengaluru; Editing by Shounak Dasgupta)
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