Considering the persistent attention from investors on the broader economic context and the demand for electric vehicles, Goldman Sachs conducted an analysis of the most recent indicators related to automotive demand.
The findings revealed that year-to-date sales have shown year-on-year growth across all three regions.
Year-to-date, sales in the United States have surged by 14% compared to the previous year, and in August, they experienced a remarkable 17% year-on-year increase. Meanwhile, in Europe, sales have grown by 18% year-to-date and registered an impressive 25% year-on-year increase in key regions during August. In China, the year-to-date sales have risen by 2% year-on-year, with a 3% year-on-year increase recorded for the month of August.
Tesla (NASDAQ:TSLA) materially reduced S/X pricing on 9/1 by 15-19%, and reduced Model Y pricing in China in mid-August. However, Tesla raised pricing on the Model 3 with the refreshed version that is now being sold in Europe and China.
Goldman Sachs revisited EPS estimates for Tesla in 2023 and 2024. Taking into account lower average selling prices, resulting in a corresponding decrease in auto gross margin, excluding credit assumptions. Goldman slightly lowered their 2023/2024 EPS estimates to $2.90/$4.15 from $3.00/$4.25.
Additionally, despite observing higher regional Tesla sales data in July and August when compared to the initial two months of the second quarter, Goldman Sachs has opted to lower its volume estimates for the third quarter of 2023. This adjustment brings the estimate down to 460,000 units. This revision is motivated by Goldman Sachs' assessment of reduced demand for the S/X models and the effects of the transition associated with the Model 3 Highland.
Goldman analysts wrote in a note, “We believe that Tesla could further lower prices in 2024 to support higher volumes which we believe will mitigate the EPS benefit from cost reductions.”
Shares of TSLA are down 0.91% in premarket trading Monday.