More trouble for Tesla (TSLA) in Europe and the UK, its third biggest region, as a combination of heightened competition, a key product changeover, and CEO Elon Musk’s polarizing politics weigh on sales. Still, one of Wall Street’s Tesla biggest fans remains bullish.
The European Automobile Manufacturers’ Association (ACEA) reports Tesla’s registrations — a close proxy for sales — in the EU, UK, and European Free Trade Association (EFTA) fell 40.1% in February, to 16,888 EVs. Over the span of January and February, Tesla EV registrations are down 42.6% (26,619).
Meanwhile, the ACEA reports total EV registrations are up for those regions, hitting 164,646 units, an increase of 26.1% compared to a year ago, and up 31.4% including January (330,584).
After a big pop to start the week, Tesla stock fell in early trading on Tuesday.
As of 1:36:40 PM EDT. Market Open.
“Europe, there was always going to be increasing competition there,” RBC analyst Tom Narayan said in a live interview on Yahoo Finance this morning. (See video above) He added that there’s also heightened competition in China, Tesla’s second biggest region behind the US.
But Narayan, a Tesla bull with an Outperform rating and $320 price target on the stock (though he did cut this from $440 last week), says Tesla is poised to overcome the weakness.
“They do have two new models — the Model Y refresh [and] the new affordable car coming, which could potentially help stem some of these losses,” he said.
Narayan signaled that he’s not too worried about Tesla’s EU sales, noting that Tesla is about half the total US EV market and adding that the sales data is actually higher in the US for the first two months of the year, though S&P registration data for January said Tesla’s metrics were lower.
Narayan did not address the elephant in the room — Elon Musk’s tumbling popularity in both the US and Europe, where his political endorsements of far-right movements have alienated a wide swath of EV-interested buyers.
With that said, Narayan’s bullish take on Tesla extends to the overall industry, where EV penetration is low, which can help all automakers, even Tesla.
“But remember: EVs are still relatively underpenetrated globally, so it could be a rising tide lifts all boats when it comes to car sales,” Narayan said.
Indeed, at least for Europe, while EV registrations were higher, petrol or gas-powered car sales were down 21.9% for the first few months of the year.
The true test of Tesla sales and registrations will be results from the month of March, when the refreshed Model Y went on sale. Investors will get some insight into those numbers when Tesla reports first quarter deliveries next week.
