UBS has lowered its target price for Tesla (TSLA) to £225, following a revised delivery forecast. The updated estimate is 367,000 units, down from a previous prediction of 437,000, indicating a 5% decline year-on-year and a 26% drop quarter-on-quarter.
This figure falls 13% below the Visible Alpha consensus. While sales incentives may boost numbers towards the end of the quarter, UBS has expressed concern over signals of reduced demand.
Demand Challenges Indicated By Short Waiting Times
Data shows short waiting times of about two weeks for the Model 3 and Model Y, indicating issues with demand rather than production. Tesla’s growth trajectory has become part of an ongoing discussion, with attention on any pricing strategies to support sales.
The lowered delivery forecast and reduced target price indicate more than a simple quarterly adjustment. UBS has recognised patterns that suggest demand for Tesla vehicles is under pressure, rather than production bottlenecks holding back deliveries. Waiting periods of around two weeks for key models reinforce this view, contradicting past instances where supply constraints played a larger role.
Although buyer incentives could encourage more orders as the quarter progresses, such measures often serve as a temporary fix rather than a fundamental shift in demand trends. Price adjustments may follow if sales figures do not show improvement. Previous changes in pricing have set a precedent, making further reductions a possibility, especially if current estimates hold.
This comes at a time when Tesla’s strategy is being reassessed, with delivery volumes being watched closely. A 26% decline quarter-on-quarter reflects a contraction that is hard to ignore. The year-on-year drop, though smaller, reinforces the idea that growth expectations require adjustment.
Market Sentiment And Strategic Response
The Visible Alpha consensus sits noticeably higher than UBS’s projection. If the revised figure proves accurate, a gap between expectations and reality emerges, with possible implications for sentiment surrounding the company. There is still time for adjustments before the quarter ends, but repeated signals of weaker demand place more weight on upcoming sales data.
From here, the focus shifts towards how Tesla chooses to respond. Adjustments in pricing, additional incentives, or other strategic moves may surface if demand concerns persist. Each action or lack thereof will be interpreted as an indication of management’s confidence.
