Tesla, Inc. (NASDAQ:TSLA) hasn’t seen an appreciable volume lift from the series of price cuts it has announced since January this year. As a Tesla executive bemoaned the sequential decline in the electric vehicle market in the first half of 2023, Future Fund’s Gary Black said he sees a recovery could be in the offing.
What Happened: Tesla’s VP of Investor Relations Martin Viecha said in a recent post on X, formerly Twitter, that global EV sales saw its first sequential decline in a long time in the first half of 2023. “Let’s see what happens in the 2nd half of this year,” he added.
Reposting his comments, Black said after the 2023 EV adoption pause, he expects EV adoption to re-accelerate in 2024 due to three factors. The fund manager said the $7,500 U.S. EV tax credit allowed under the Inflation Reduction Act 2022 will go to off-invoice on Jan. 1, 2024, and the $7,500 reduction will be reflected in lower monthly payments.
Secondly, category news driven by the Cybertruck launch will spark new interest in all EVs, Black said. Thirdly, renewed interest in global EV adoption is likely as autonomous driving systems reach Level 3 and Level 4 automation, he added.
Why It’s Important: The slow uptake of EVs prompted a price war among EV manufacturers, spearheaded by Tesla. While Tesla could afford to take a hit to its margins due to its being profitable and the scale of its manufacturing, the flurry of new entrants, which thronged the EV market, has found the going tough. This has been reflected in the stock prices of these startups.
Tesla CEO Elon Musk has been blaming the economy for the predicament, although critics suggest it is an excuse. If the Federal Reserve begins reversing its rate hikes and the economic uncertainty ceases to be an overhang, a reversal could be in the cards.
In premarket trading on Monday, Tesla stock rose 1.30% to $210, according to Zenger News Pro data.
Produced in association with Benzinga
