HOT COMMENT

January 12, 2024

Tesla, Inc. (TSLA) Overweight

Examining Recent (Mostly Negative) News Flow re: Prices, Wait Times, Production

CONCLUSION
PRICE: US$227.22
There have been several TSLA-related developments over the past few days, most of
TARGET: US$295.00
which are likely to be interpreted negatively (at least in a tactical sense). The newsflow Based on 20-yr DCF, WACC=14.0%
can be divided into three categories: 1) price cuts in China; 2) production stoppages in
Germany; 3) wait times in the United States. We discuss each of these below (and on pages Alexander E. Potter
Sr Research Analyst, Piper Sandler & Co.
2-6). As usual, we think most of this “noise” has little bearing on the long-term thesis. But
612 303-6709, alexander.potter@psc.com
nonetheless, it's important for investors to understand how sentiment is evolving, because
Ben Johnson
TSLA is (and will likely remain) more volatile than many other stocks in our coverage. Research Analyst, Piper Sandler & Co.
612 303-6212, ben.johnson@psc.com
Thoughts re: price cuts in China
1) Overnight, Tesla announced that Model 3 and Model Y prices have been reduced
2) See pages 2-4 for charts displaying price trends over the past few years R I S K S TO A C H I E V E M E N T O F
3) In China, the base MSRP for a standard range Model 3 was cut by 5.9% P T & R E C O M M E N D AT I O N
Production delays, failure to meet customer
4) The base MSRP for a standard range Model Y was reduced by 2.8%
expectations, product defects and recalls, supply
5) For both models, prices on long-range variants were also reduced by 2%-4%
chain disruptions, slow adoption of electric
6) For reference, China sales of Model 3/Model Y represent 8%/24% of total volume vehicles.
7) Note that Tesla often “passes on” lower input prices, in order to boost affordability
8) Lithium spot prices fell steeply by in 2023, and are still falling (-40% since September) Price Performance - 1 Year
USD
350
Thoughts re: production stoppage in Germany
1) Disruptions in the Red Sea have begun impacting automotive production in Europe 300

2) Tesla will be closing its German factory between January 29 and February 11 250
3) Today Volvo announced its own stoppage, due to ongoing conflicts in the Middle East
200
4) So long as the stoppage is not extended, we think Tesla will lose ~10k units of production
5) Germany is Tesla's lowest-volume plant; 10k units compares to annual sales of 2M+ 150

6) Presumably, Tesla can/will make up for lost production once the facility starts back up
100
Jan-23 Mar-23 May-23 Jul-23 Sep-23 Nov-23 Jan-24

Thoughts re: wait times in the United States Source: Bloomberg

1) A new version of the Model 3 is now being produced at Tesla's facility in California
2) When a similar change was implemented in Shanghai, wait times for Model 3 increased
3) The same trend is now evident in the U.S.; Model 3 wait times jumped on January 11
4) U.S. Model 3 buyers must now wait 3-12 weeks for delivery (vs. 0-7 weeks previously)
5) The longer wait time may be due to both slower production and higher demand
6) Until/unless wait times come back down, Model 3 price cuts seem unlikely in the U.S.
7) For charts illustrating recent wait time trends, see pages 5-6

C O M PA N Y D E S C R I P T I O N
Tesla sells electric vehicles, batteries, solar-powered rooftops, and various other products.

Piper Sandler does and seeks to do business with companies covered in its research reports. As a result, investors should be aware
that the firm may have a conflict of interest that could affect the objectivity of this report. Investors should consider this report as only
a single factor in making their investment decisions. This report should be read in conjunction with important disclosure information,
including an attestation under Regulation Analyst Certification, found on pages 7 - 8 of this report or at the following site:
http://www.pipersandler.com/researchdisclosures .
Tesla, Inc. Page 1 of 8
 Tesla’s Pricing in China
In terms of the impact on margins, today’s price cuts may be partially offset by lower input costs

Source: Data extracted from tesla.com; Piper Sandler estimates

Tesla, Inc. Page 2 of 8

 Tesla’s Pricing in the United States
Prices fell modestly in early Q4, but have been stable ever since

Source: Data extracted from tesla.com; Piper Sandler estimates

Tesla, Inc. Page 3 of 8

 Tesla’s Pricing in Europe (German Prices Used as Proxy)
In recent weeks, Tesla has not implemented any major pricing campaigns in Europe

Source: Data extracted from tesla.com; Piper Sandler estimates

Tesla, Inc. Page 4 of 8

 Tesla Delivery Wait Times: Model 3
Wait times ticked higher recently in the U.S. (likely due to the ongoing “facelift” for Model 3)

Source: Data extracted from tesla.com; Piper Sandler estimates

Tesla, Inc. Page 5 of 8

 Tesla Delivery Wait Times: Model Y
Model Y wait times have been relatively stable in all regions (generally <5 weeks)

Source: Data extracted from tesla.com; Piper Sandler estimates

Tesla, Inc. Page 6 of 8

 HOT COMMENT
January 12, 2024

IMPORTANT RESEARCH DISCLOSURES

Rating and Price Target History for: Tesla, Inc. (TSLA) as of 01-11-2024
02/01/21 09/09/21 10/27/21 02/14/22 04/18/22 05/17/22 09/01/22 09/28/22 01/18/23 05/01/23 07/19/23 10/16/23 11/20/23
OW:$400 I:OW:$400 OW:$433.33 OW:$450 OW:$420 OW:$344 OW:$360 OW:$340 OW:$300 OW:$280 OW:$300 OW:$290 OW:$295
450
400
350
300
250
200
150
100
2021 Q1 Q2 Q3 2022 Q1 Q2 Q3 2023 Q1 Q2 Q3 2024 Q1

Created by: BlueMatrix

Notes: The boxes on the Rating and Price Target History chart above indicate the date of the fundamental Equity Research Note, the rating and the price
target. Each box represents a date on which an analyst made a change to a rating or price target, except for the first box, which may only represent the
first Note written during the past three years.
Legend:
I: Initiating Coverage
R: Resuming Coverage
T: Transferring Coverage
D: Discontinuing Coverage
S: Suspending Coverage
OW: Overweight
N: Neutral
UW: Underweight
NA: Not Available
UR: Under Review

Distribution of Ratings/IB Services

Piper Sandler

IB Serv./Past 12 Mos.
Rating Count Percent Count Percent
BUY [OW] 556 56.62 132 23.74
HOLD [N] 381 38.80 38 9.97
SELL [UW] 45 4.58 2 4.44

Note: Distribution of Ratings/IB Services shows the number of companies currently covered by fundamental equity research in each rating category from
which Piper Sandler and its affiliates received compensation for investment banking services within the past 12 months. FINRA rules require disclosure
of which ratings most closely correspond with "buy," "hold," and "sell" recommendations. Piper Sandler ratings are not the equivalent of buy, hold or sell,
but instead represent recommended relative weightings. Nevertheless, Overweight corresponds most closely with buy, Neutral with hold and Underweight
with sell. See Stock Rating definitions below.

Analyst Certification
The analyst Alexander E. Potter, primarily responsible for the preparation of this research report, attests to the following:

The views expressed in this report accurately reflect my personal views about the subject company and the subject security. In addition, no part of my
compensation was, is, or will be directly or indirectly related to the specific recommendations or views contained in this report.

Piper Sandler research analysts receive compensation that is based, in part, on overall firm revenues, which include investment banking revenues.

Time of dissemination: 12 January 2024 10:37EST.

Tesla, Inc. Page 7 of 8

 HOT COMMENT
January 12, 2024

Research Disclosures
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