Both bulls and bears are watching: with only two cars, where is the limit of Tesla's "price war"?

Tesla, which relies on the Model 3 and Model Y to boost sales, where is the end of the "price war"? Will it be on the occasion of the delivery of the electric pickup truck Cybertruck?

Wall Street News pointed out in the article that Tesla's quarterly deliveries reached a new high in the second quarter, but inventory is still increasing, and Tesla production has exceeded deliveries for the fifth consecutive quarter.

Bernstein analyst Toni Sacconaghi wrote in a recent note this week that they believe Tesla needs to continue to cut prices and promote profits to stimulate demand:

"We think Tesla needs to cut prices further and increase promotions this year or next, which will undoubtedly further weigh on margins."

Gary Black, Tesla's well-known bull and co-founder and managing partner of Future Fund, tweeted on July 4 about the importance of Cybertruck to Tesla's future.

Black expects Tesla's sales to rise by a massive 53% in 2024, boosted by Cybertruck, which will further stimulate Tesla's stock price. Tesla's stock price has jumped more than 161% this year to $282.48.

Inventory is still increasing, Tesla will continue to cut prices?

Tesla delivered more than 466,100 vehicles to customers worldwide in the second quarter, up 83% year-over-year and about 24,000 more than analysts' forecasts, while production was 479,700, more than deliveries by 13,600. In the past year, Tesla's cumulative production has exceeded deliveries by about 74,300 vehicles.

When the fish and the bear's paw cannot have both, Tesla has obviously resolutely chosen the former in terms of sales growth and profit improvement.

Tesla CEO Elon Musk said in the earnings call after the earnings conference that in the short term, scale is more important to Tesla than profit.

Now, the market's attention turns to the impact of the "price war" on Tesla's profit margin in the second quarter and full year, in this regard, many Wall Street analysts believe that Tesla Motors gross margin will inevitably fall below 20% before the end of this year. Deutsche Bank analysts wrote in a note: "We continue to believe that Tesla is at risk of further price cuts for the rest of this year and into 2024." ”

In the face of record deliveries, the biggest contributors are still Model Y and Model 3, which not only won the US market, but also the best-selling model in the European market and the best-selling SUV in the Chinese market.

Bloomberg analysis believes that Tesla now needs to think about how to squeeze out more sales growth in the two cars that account for 97% of its sales.

But the Model Y and Model 3 were released three and six years ago, respectively, and now the market is expecting Tesla to release another "family-raising" model, and that is likely to be the much-anticipated Cybertruck.

"Price war" hit the pickup truck appeared?

Gary Black tweeted, again talking about the importance of Tesla's electric pickup truck - Cybertruck - at the end of the third quarter of this year.

Black believes that since pickup trucks account for 20% of the U.S. car market, Cybertruck will expand Tesla's addressable market reach (TAM):

People who shorted Tesla really don't understand how important Cybertruck will be to the growth of Tesla's overall business in 2024, and Tesla's TAM will grow significantly with the launch of Cybertruck.

Black expects Tesla's sales to rise by a massive 53% in 2024, boosted by Cybertruck

The surprise sales of the 2021 Model Y model caused Tesla (stock price) to soar 743% in 2020 (compared to the Nasdaq up 50%).

Similarly, the Cybertruck sales halo will accelerate Tesla's overall sales growth to more than 50% by 2024.

The launch of the Cybertruck is crucial for Tesla, Tesla's latest official comment on the timeline is planned for delivery "around the end of the third quarter", Cybertruck has repeatedly "bounced tickets", and its launch is arguably Tesla's most anticipated model of the year, Tesla fans believe it will be a pivotal moment.

According to Electrek, Tesla plans to produce 375,000 Cybertrucks a year, which far exceeds Wall Street expectations, and analysts had expected production of less than 100,000 in 2024 and about 240,000 by 2027.

Recently, Tesla CEO Musk also gave the production forecast of Tesla Cybertruck at Tesla's annual shareholder meeting. He thought about 250,000 could be produced each year, but he later added that it could be between 250,000 and 500,000.

Will the new Model 3 and Model Y spur sales?

Musk has repeatedly stressed that the price of the Cybertruck will not be low. Musk initially said the pickup would start at less than $40,000. However, by 2021, such "attractive" prices have been removed from the Tesla website.

Musk told shareholders last year that the CyberTruck's specifications and pricing have changed since its release in 2019. Now Tesla simply states: "The final price list will be provided to you as the delivery date approaches." ”

So before it can mass-produce new cars at a lower cost, Tesla also needs to bet on Model 3 and Model Y.

Late last year, it was reported that Tesla was designing a new Model 3, codenamed Highland, which is expected to launch in the second half of 2023. The report also said that the new Model 3 will be fully adjusted in terms of exterior, interior, configuration and power system.

Subsequently, a prototype of the Model 3 with camouflage was found to be tested in California. In April, the first photo of the new Model 3 without camouflage leaked, showing changes in the lights, bumper, mirrors and interior.

In March this year, Reuters quoted three people familiar with the matter as reporting that the new Model Y model, internally codenamed Project Juniper, will also be officially launched in the third quarter of 2024 and is expected to go on sale as soon as the fourth quarter of the same year. It is reported that the new car is also expected to be equipped with the same LCD digital instrument cluster as the new Model 3 for the first time, and make a slight adjustment to the body size, and adopt a 2+3+2 seven-seat layout design.

Although Tesla has done everything in its power to expand sales, as established American car manufacturers develop electric vehicles, the market expects Tesla's market share to shrink further in the future.

Bank of America analysts estimated in a report that Tesla's share of the U.S. electric vehicle market will decline to 18% by 2026. Compared with Tesla's 62% market share in the US electric vehicle market in 2022, this proportion has dropped significantly, not to mention compared with Tesla's peak of 78% in 2018.