Tesla (TSLA) is expected to see a “challenging” 2024 for the global auto industry and a “material” decline in the automaker’s profitability toward the non-GAAP earnings per share of $2, Morgan Stanley said in an emailed note to clients on Thursday.
For its 2024 outlook, the company said its volume growth would be “notably lower” than last year’s 38% growth but did not include any volume ranges or any discussion of tailwinds or headwinds concerning gross margin, operating expense and capital expenditure, according to the note.
Tesla’s guidance for 2024 reflects a slowing electric vehicle market, an uncertain economic and regulatory environment in addition to political events and China consumer slowdown, and a potential continued rise in costs in developing the next generation product, Morgan Stanley said.
“For Tesla shares to perform from here, investors must expect FY24 to be a trough year for auto profitability, must have increased confidence in the introduction of new models, and must see tangible proof that the [artificial intelligence] side of the story is bearing fruit,” Morgan Stanley said.