Tesla's Sales Hit Brakes: Goldman Sachs Cuts Price Target Amid Global Declines

Tesla faces significant headwinds as Goldman Sachs revises its price target downward due to weaker sales performance across key global markets. Despite these challenges, the electric vehicle giant maintains strong financials and is making strategic moves, including leveraging vertical integration for battery sourcing. The company's focus on innovation and supply chain resilience is crucial as it navigates a competitive landscape.

Tesla's Sales Performance Under Scrutiny

Goldman Sachs has lowered its price target for Tesla from $295 to $285, maintaining a Neutral rating. This adjustment reflects a notable decline in sales across major markets, including the United States, Europe, and China. Tesla's shares have seen an almost 18% drop in the past week, trading at $284.70.

• United States: Quarter-to-date deliveries through May experienced a mid-teens year-over-year decline.

• Europe: April registrations plummeted 50% year-over-year, with May showing a mid-20% decrease.

• China: May saw a 20% year-over-year drop, despite a 5.5% sequential increase from April.

Revised Delivery Forecasts

Based on declining sales data and consumer surveys, Goldman Sachs has revised its second-quarter delivery projections for Tesla. The new forecast ranges between 335,000 and 395,000 vehicles, with a base case of 365,000. This is a significant reduction from the prior estimate of 410,000 and falls below the Visible Alpha Consensus of 417,000.

Regional Challenges Highlighted

Specific regional data further illustrates Tesla's sales struggles:

• Germany: May sales dropped 36.2% year-over-year, contrasting with a 44.9% surge in overall EV registrations.

• Spain: Sales fell 29% last month.

These declines underscore shifting consumer preferences and intensified competition within the electric vehicle market.

Strategic Moves and Resilience

Despite the sales challenges, Tesla is undertaking strategic initiatives to mitigate losses and maintain its market position:

• Chinese Government Campaign: The Model 3 and Model Y are part of a campaign to boost rural sales in China.

• Supply Chain Strategy: Piper Sandler analysts reiterated an Overweight rating, emphasizing Tesla's vertical integration in battery sourcing. Alexander Potter noted, "Thanks to vertical integration, Tesla is the only car company that is trying to source batteries, at scale, without relying on China.

Tesla's strong financials, with $95.7 billion in trailing twelve-month revenue and a $917 billion market capitalization, provide a solid foundation as it navigates these short-term hurdles through innovation and supply chain resilience.