Tesla's price war may be far from over, and if it continues to spread, domestic gasoline car manufacturers in the United States could face serious blows. A recent report from Morgan Stanley suggests that Tesla is expected to deliver 1.9 million vehicles this year and break through 7.9 million by 2030.
Rising Inventory: Tesla Price Drop Just a Matter of Time On Sunday, Tesla announced record-breaking sales data for the second quarter, with 466,000 quarterly deliveries, surpassing Wall Street expectations by 24,000 units.
Morgan Stanley analyst Adam Jonas noted in a report released on Monday that Tesla's Q2 deliveries exceeded market expectations, prompting him to raise future delivery forecasts for Tesla. He expects the electric vehicle maker to deliver 1.9 million cars this fiscal year and reach 7.9 million by the fiscal year 2030.
It has been highlighted in previous reports that Tesla's production has exceeded its deliveries for five consecutive quarters, indicating that its inventory continues to grow. Hence, it's necessary for Tesla to continue offering incentives to stimulate demand. For instance, Tesla's official U.S. website announced a promotion in June, offering three months of free charging for all Model 3 orders placed before the end of the quarter.
Previously, Tesla CEO Elon Musk had suggested that while a 20% gross margin is still a performance baseline that Tesla intends to maintain in the long run, scale is more important to Tesla than profit in the short term.
Many Wall Street analysts believe that due to the effect of price reductions, Tesla's gross margin will inevitably fall below 20% by the end of this year. A Deutsche Bank analyst wrote in a report, saying that Tesla may further reduce prices in the remaining part of the year and into 2024.
Morgan Stanley's Adam Jonas also believes that, given competition from Chinese electric vehicle manufacturers, Tesla must further reduce its vehicle costs. He suggested that Tesla would choose to further cut prices and launch models priced below $25,000, continuing to squeeze the survival space of gasoline vehicle companies.
Tesla: The Ultimate Victor of America's Automotive Electrification Apart from that, Jonas is rather optimistic about Tesla's future.
He noted that the adoption rate of electric vehicles in the domestic market in the United States is much slower than Wall Street had anticipated, suggesting that Tesla will maintain its leading advantage in the American electric vehicle market for a long time.
He also stated that compared to market expectations, the energy transition of the U.S. car market will occur at a "lower speed" before 2030. The overall scale of electric vehicles might be smaller than initially anticipated by Wall Street, but Tesla, with its first-mover advantage, will "get a bigger piece of a smaller cake."
In 2022, Tesla held over 60% of the entire U.S. electric vehicle market share. The scale effect and the years of meticulous cultivation of the supply chain have provided this star car company with sufficient profit margins to wage a price war, leaving latecomers in dire straits. Their vehicle production costs are usually much higher than Tesla's, and matching Musk in a price war equates to selling cars at a loss.
Taking the American gasoline vehicle giant Ford as an example, in 2022, Ford's electric vehicle division lost $2.1 billion. This loss continued into the first quarter of this year, adding another $700 million. Looking forward to the full-year performance in 2023, Ford estimates that the losses from its electric vehicle business will expand to $3 billion.
