Competition brewing for Tesla (TSLA)?
While the US automaker has been the dominant force in the luxury electric-car department for some time now, European luxury companies are starting to catch up. Just recently, Jaguar announced its US version of all-electric crossover I-PACE, which will loosely compete with the Tesla Model X. Though the two cars have some significant differences — the Jaguar is in a different size category and has a starting price $10,000 less than the Model X — this is the first car that is even in the same category as the Model X, so even with the differences, these two will probably be directly competing against each other (at least until other models are launched).
However, even with increased competition, JMP analyst Joseph Osha remains bullish on Tesla, rating the company Outperform with a $406 price target. (To watch Osha’s track record, click here)
European luxury automakers have for years been talking about (and teasing) models that would compete with Tesla. Osha says that the time has finally come. “Premium competitors including Jaguar, Mercedes, Audi, and Porsche are preparing to confront Tesla in the premium EV market,” the analyst says, which “marks a significant change in the competitive environment for Tesla.” Until this point, Tesla’s greatest competition was “small, shorter range cars that do not really address [its] market segment.” But the rise of comparable vehicles creates a new chance for Tesla that are “significant.”
While Osha lauds the new I-PACE he says, “it is not clear, however, that a credible first effort is going to be enough to disrupt the market.” Osha points to the higher price point compared to the Model 3 (even though the two cars are extremely different) and says it is “[not as] impressive as the Model X,” even as base-model speed performance actually favors the Jaguar.
Inside the car itself, Osha points to “several first-effort limitations, most notably a poorly executed infotainment system and a dealership network that may not be able to position and sell the car effectively.” As a result, he does “not see the car having much of a competitive impact, although we are more worried about the pending launch of the Audi e-Tron later this year.”
Even without the competition, Wall Street has held mixed reviews on Tesla for some time now. There has been management challenges at the company, while production woes have added to concern. As a result, TipRanks analysis of 21 analyst ratings on the stock shows a consensus Hold rating, with eight analysts recommending Buy, five recommending Hold and eight Selling. The average price target is currently standing at $326.05, representing a 6% upside from current levels. (See TSLA’s price targets and analyst ratings on TipRanks)