Tesla - Stock Analyst Research

Target Price* 175.00
Recommendation NEUTRAL
Market Cap*-
Publication Date29 Jan 2024

*At the time of publication

Tesla Inc. - Intensifying competition to weigh further on margins

  • 4Q23 revenue was in line with our estimates, while Adj. PATMI was above on higher interest income. FY23 revenue/Adj. PATMI was at 97%/108% of our FY23e forecasts. TSLA met its 1.8mn (+38% YoY) vehicle delivery target for FY23.
  • Expected volume growth slowdown due to a shift in focus to developing new products like its next-generation low-cost EV, while margin pressures remain due to intensifying competition from BYD and other Chinese EVs. We expect flat YoY gross margins for FY24e
  • We cut our FY24e revenue/EBITDA estimates by 7%/27%, respectively, to reflect a slowdown in unit growth and further margin headwinds. Our DCF target price is cut to US$175 (prev. US$240). We downgrade to NEUTRAL from ACCUMULATE. We believe that competition will only intensify further from aggressive Chinese EV makers, putting further pressure on pricing and margins. Our WACC assumption of 9% remains unchanged, while we reduce the growth rate to 4% (prev. 5%).



The Positive

+ Record deliveries in 4Q23, Model Y best-selling car in FY23. TSLA delivered 485k vehices in 4Q23, a new record for a single quarter, with the company also hitting its FY23 target of 1.8mn deliveries. Additionally, Model Y was the best-selling vehicle globally with >1.2mn (65% YoY) units sold – beating Toyota’s RAV4 and Corolla models.


The Negatives

Intensifying competition and lower prices hurting margins. We had assumed the intense price war in China over the last 1.5 years would ease as EV players shift from buying market share to improving profitability. However, we now expect competition to continue intensifying – with BYD spending another ~US$13bn in CAPEX for FY24e, and other Chinese EV companies like Li Auto and Xpeng growing CAPEX 30+% YoY. EV volume growth YoY for BYD is almost 2x that of TSLA. Increasing competition should place further pressure on prices and margins in the near term. ASPs for TSLA vehicles were down -17% YoY in FY23.


Slowdown in near-term growth due to focus on developing new products. TSLA expects FY24e unit volume growth to be significantly lower vs FY23 (+38% YoY), with its focus shifting away from ramping production of current EVs as lead times have dwindled, to developing newer products like its next-gen low-cost EV. Given ongoing price wars and still high interest rates, we expect ASPs to decline roughly 4% YoY, and have also reduced our FY24e revenue estimates by 7%. We expect TSLA to lose the top spot to BYD in EV deliveries for FY24e.


ASP (Average Selling Price): total auto revenue for a given period divided by the number of vehicles sold.

About the author

Jonathan Woo
Research Analyst

Jonathan covers the US technology sector focusing on internet companies. Formerly a national and professional athlete, he graduated from the University of Oregon with a Bachelor’s Degree in Social Sciences.

Latest Reports

Contact us to Open an Account

Need Assistance? Share your Details and we’ll get back to you


This material is provided by Phillip Capital Management (S) Ltd (“PCM”) for general information only and does not constitute a recommendation, an offer to sell, or a solicitation of any offer to invest in any of the exchange-traded fund (“ETF”) or the unit trust (“Products”) mentioned herein. It does not have any regard to your specific investment objectives, financial situation and any of your particular needs. You should read the Prospectus and the accompanying Product Highlights Sheet (“PHS”) for key features, key risks and other important information of the Products and obtain advice from a financial adviser (“FA“) pursuant to a separate engagement before making a commitment to invest in the Products. In the event that you choose not to obtain advice from a FA, you should assess whether the Products are suitable for you before proceeding to invest. A copy of the Prospectus and PHS are available from PCM, any of its Participating Dealers (“PDs“) for the ETF, or any of its authorised distributors for the unit trust managed by PCM.  

An ETF is not like a typical unit trust as the units of the ETF (the “Units“) are to be listed and traded like any share on the Singapore Exchange Securities Trading Limited (“SGX-ST”). Listing on the SGX-ST does not guarantee a liquid market for the Units which may be traded at prices above or below its NAV or may be suspended or delisted. Investors may buy or sell the Units on SGX-ST when it is listed. Investors cannot create or redeem Units directly with PCM and have no rights to request PCM to redeem or purchase their Units. Creation and redemption of Units are through PDs if investors are clients of the PDs, who have no obligation to agree to create or redeem Units on behalf of any investor and may impose terms and conditions in connection with such creation or redemption orders. Please refer to the Prospectus of the ETF for more details.  

Investments are subject to investment risks including the possible loss of the principal amount invested. The purchase of a unit in a fund is not the same as placing your money on deposit with a bank or deposit-taking company. There is no guarantee as to the amount of capital invested or return received. The value of the units and the income accruing to the units may fall or rise. Past performance is not necessarily indicative of the future or likely performance of the Products. There can be no assurance that investment objectives will be achieved.  

Where applicable, fund(s) may invest in financial derivatives and/or participate in securities lending and repurchase transactions for the purpose of hedging and/or efficient portfolio management, subject to the relevant regulatory requirements. PCM reserves the discretion to determine if currency exposure should be hedged actively, passively or not at all, in the best interest of the Products.  

The regular dividend distributions, out of either income and/or capital, are not guaranteed and subject to PCM’s discretion. Past payout yields and payments do not represent future payout yields and payments. Such dividend distributions will reduce the available capital for reinvestment and may result in an immediate decrease in the net asset value (“NAV”) of the Products. Please refer to <www.phillipfunds.com> for more information in relation to the dividend distributions.  

The information provided herein may be obtained or compiled from public and/or third party sources that PCM has no reason to believe are unreliable. Any opinion or view herein is an expression of belief of the individual author or the indicated source (as applicable) only. PCM makes no representation or warranty that such information is accurate, complete, verified or should be relied upon as such. The information does not constitute, and should not be used as a substitute for tax, legal or investment advice.  

The information herein are not for any person in any jurisdiction or country where such distribution or availability for use would contravene any applicable law or regulation or would subject PCM to any registration or licensing requirement in such jurisdiction or country. The Products is not offered to U.S. Persons. PhillipCapital Group of Companies, including PCM, their affiliates and/or their officers, directors and/or employees may own or have positions in the Products. Any member of the PhillipCapital Group of Companies may have acted upon or used the information, analyses and opinions herein before they have been published. 

This advertisement has not been reviewed by the Monetary Authority of Singapore.  


Phillip Capital Management (S) Ltd (Co. Reg. No. 199905233W)  
250 North Bridge Road #06-00, Raffles City Tower ,Singapore 179101 
Tel: (65) 6230 8133 Fax: (65) 65383066 www.phillipfunds.com