Tesla’s Model Y announcement could indicate softening demand and lack of consumer enthusiasm for a cheaper Model 3, analysts at RBC say in a note.
Tesla Inc.’s Model Y may at last have a reveal date, but the timing of the announcement could provide more “fodder for the bears” than act as a catalyst for the stock, analysts at RBC said Monday.
Announcing the cheaper Model 3 last week was an indicator that demand for higher-end Model 3 vehicles “has not been as strong as the company expected,” said the RBC analysts, led by Joseph Spak. Ordering the cheaper $35,000 Model 3 requires a $2,500 deposit. That is “notable timing,” the analysts said, since Tesla on Friday repaid $920 million in convertible notes, likely using up a quarter of its cash.
“More customers are growing frustrated and more potential customers are likely to know someone who has had a bad experience. To be clear, we don’t mean to imply that service issues are rampant, but they are occurring,” and enthusiasm for the brand might be lower than when Tesla launched the Model 3 three years ago, they said.
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