Analysts at RBC Capital Markets said one of the key takeaways from the current earnings season is that the electric vehicle (EV) market “shows no signs of inflection.”
Tesla’s (NASDAQ:) 2024 forecast calls for significantly lower growth rates than 2023, attributing the cautious outlook to uncertain economic conditions such as affordability and interest rates.
This has led to a consensus expectation of a 14% increase in shipments in 2024, a sharp decline from the 40% growth seen in 2023, amid concerns that price cuts may be required to meet those forecast volumes.
Meanwhile, Ford (NYSE:) reported its electric vehicle losses worsened in the fourth quarter of 2023, with the loss widening to $1.57 billion from $1.329 billion in the previous quarter, and expects even higher losses in 2024, beating consensus – assessments.
To sum it up, the analysts write that legacy OEMs “may be better positioned compared to the Pure Play EV names.”
“In particular, names less exposed to the fixed cost of electric vehicles (Stellantis (NYSE:)) or demand issues (Ferrari (NYSE:)),” they added.
Meanwhile, the pursuit of Level 4 autonomous driving continues to face hurdles, indicating that significant obstacles remain on the path to full automation.
“Currently the focus will likely be on Tier 2+ efforts. OEMs may move toward outsourcing suppliers rather than in-house autonomy. Mobileye SuperVision and Tesla FSD agree with this view,” analysts say.
“We don’t expect a major Tesla FSD licensing announcement any time soon, but adding rate hikes to existing Teslas could be a major catalyst for the stock. This may happen due to the decline in FSD prices,” they added.
Finally, concerns about excessive inventory build-up among suppliers appear to be largely unfounded, suggesting that concerns about overstocking may be exaggerated and more specific to Mobileye.