Bank of America analyst John Murphy has noted that while Tesla is poised for future growth, the transition to simultaneous Model Y production across its factories will cause short-term production losses and margin impacts. CFO Vaibhav Taneja emphasized the unprecedented nature of this changeover, predicting a loss of approximately 100,000 vehicles during the adjustment period. Furthermore, Murphy lowered his earnings per share forecast for 2025 and raised concerns about decreasing average selling prices and competitive leasing options putting pressure on Tesla's margins. He remains cautious with a Neutral rating and a price target of $490 per share.
While we feel confident in our team's abilities to ramp production quickly, note that it is an unprecedented change, and we are not aware of anybody else taking the best-selling car on the planet and updating all factories at the same time.
This changeover will result in several weeks of lost production in the quarter. As a result, margins will be impacted due to idle capacity and other ramp-related costs, as is common in any launch, but will be overcome as production is ramped.
Murphy predicts that the shift to Model Y Juniper in all of Tesla's factories will result in a production loss of 100,000 vehicles.
Considering his forecast, Murphy lowered his 2025e EPS prediction for Tesla from $3.15 to $3.05. He remains cautious, with a Neutral rating and a $490 price target for Tesla shares.
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