Barclays reiterated an Equal Weight rating on Tesla, Inc. (NASDAQ:TSLA) with a 12-month price target of $260.00 ahead of the electric automaker’s 4Q deliveries report.
Following a disappointing 3Q deliveries result for Tesla, analysts at Barclays expect the company will report ~490k units delivered (ahead of the consensus estimate of ~480k), allowing the company to reach its 1.8 million unit delivery volume target for 2023.
Analysts suggest that the fourth-quarter sales surge might be driven by the chance to advance purchases before electric vehicle (EV) subsidies end in the US, Germany, and France. These subsidies affect approximately 15% of Tesla's yearly sales, excluding individual customer eligibility.
Earlier this week, Tesla announced that the Model 3 SR and LR versions in the US would lose the full $7,500 IRA credit by the year's end, following a new interpretation of IRA guidelines released in early December. Tesla emphasized the need for delivery by December 31 to secure the complete credit.
In Germany, reports confirmed that EV subsidies were likely to cease on December 31, 2023. Meanwhile, France clarified that the Model 3 would no longer qualify for the €5,000 EV subsidy from December 15 onwards.
Taken together, Barclays believes these subsidy expirations will likely create a sense of urgency in December for eligible consumers, driving a surge in deliveries.
Tesla is expected to make negative revisions to 2024 delivery estimates, after analysts’ buyside conversations.
“Our sense is that expectations are for '24 unit sales to be in line with or lower than our estimate.” Wrote analysts at Barclays in a note.
Barclays forecasts 2024 deliveries of ~2.0 million units, below consensus at ~2.2 million units, and implying low DD% growth vs. 2023.
Shares of TSLA are up 0.21% in pre-market trading on Monday.