Forecasts from UBS
Tesla shares fell on Tuesday as UBS cut its target price its growth forecast for the next 12 months was lowered from $730 to $660.
Tesla (TSLA) remains the global leader in electric vehicles, an analyst at Swiss bank UBS said on Tuesday. However, the analyst maintained a "neutral" rating and lowered its target price on Tesla shares from $730 to $660.
Tesla has faced reputational problems in China and the US automaker's latest gaffe was a recall of more than 285,000 vehicles in China due to a safety hazard related to the cruise control feature.
While the recall does not involve an actual return of the cars, as fixes will be made remotely via an online software update this is not the news Tesla investors want to hear amid fierce competition in China.
Nonetheless, long-term investors should consider that despite all the temporary difficulties, Tesla remains the "undisputed leader" in UBS's electric car stock portfolio.
Tesla sales in China were also up 29% in May, according to the China Passenger Car Association, which belied negative forecasts. Tesla shares are up 13% since these data were released on June 8.
In support of its position, UBS raised its target price for Tesla's competitors' shares:
- General Motors (GM)'s target share price, with a "buy" recommendation, was raised from $75 to $79, which is an upside forecast from the current price of $58.83;
- the target price of shares in Volkswagen, Europe's electric car leader, is $357 (€300), indicating high upside potential from the current price of €216;
- The bank also raised its target price from $13 to $16 on Ford (F) shares, rated 'neutral'.
Other entrants to the fiercely competitive electric car market include South Korean carmaker Hyundai, French Renault, and China's Nio (NIO), BYD, XPeng (XPEV) and Li Auto (LI).
According to a recent UBS survey of more than 11,000 consumers in the world's largest electric car markets, 43% of them are likely to consider buying an all-electric car up from 37% a year ago.
Following the survey, UBS raised its forecast for sales in China to 2.5 million electric vehicles in 2021 from 1.9 million, assuming that electric vehicles will account for 20% of the global car market by 2025 and 50% by 2030.
