Tesla's relative cost reductions this year are much less than might appear - Bernstein
Bernstein analyst Toni Sacconaghi reiterated an Underperform rating and $150.00 price target on Tesla (NASDAQ: TSLA).
The analyst commented: "Amid a disappointing quarter for Tesla, investors (and the company) have highlighted cost reductions as a silver lining. Tesla's average COGS per car has declined $2.5k from $39.2k in Q3 22 to $36.7k in Q3 23, and bulls point to Tesla's ability to structurally lower cost as a key competitive advantage. That said, our analysis suggests that Tesla's relative cost reductions this year are much less than might appear, with perhaps ~$2k out of the $2.5k reduction coming from industry-wide factors that may not be repeated next year and that don't necessarily improve Tesla's cost position relative to other EV OEMs. Perhaps not surprisingly, other EV makers appears to be enjoying similar cost tailwinds. Our analysis suggests that much of Tesla's cost reduction has been driven by an industry-wide reduction in lithium prices (~$700/car), IRA tax production credits (~$460/car), a mix shift to the cheaper Model 3/Y (~$530/car), and to cheaper trims within models ($430/car). While there is some uncertainty around the exact contribution from each of these cost drivers - we believe the remaining ~$400/car represents Tesla's true "structural cost reduction"."
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Shares of Tesla closed at $212.08 yesterday.