Tesla Inc (TSLA US)_Reduce_ 4Q24 deliveries miss poses growth question

Key Points Industry/Company Involved: - Tesla Inc (TSLA US) Core Views and Arguments: 1. 4Q24 Deliveries Missed: Tesla's 4Q24 deliveries came in at 496k, 3% below the VA consensus. This missed the company's guidance of "slight growth in 2024" and raised concerns about the company's ability to achieve its ambitious 20-30% delivery growth target in 2025. [2] 2. Production Weakness: Production in 4Q24 was weak, down 7% YoY and 7% below deliveries. This could imply soft sales development into 1Q25. [2] 3. Energy Storage Strength: The Energy Storage business saw strong growth with 11GWh deployed in 4Q24, up 245% YoY and 60% QoQ. However, this was not enough to offset the auto weakness. [2] 4. Sequential Weaker Earnings Expected: TSLA is expected to report sequentially weaker earnings in 4Q24e, with the group gross margin down 100bps QoQ. [3] 5. Uncertainty in Pre-revenue Opportunities: The realization of pre-revenue opportunities, such as autonomous vehicles, remains uncertain due to regulatory approval and commercialization challenges. [3] 6. Maintain Reduce Rating: HSBC maintains a Reduce rating on TSLA with a target price of USD140.00, implying 65% downside to the current share price. [4] Other Important Points: 1. Valuation: The valuation approach used by HSBC is a 50:50 weighted average of DCF and peer multiples-based valuation. [4] 2. Upside Risks: Upside risks include the launch of new BEV models and market enthusiasm for Tesla's AI endeavors and associated projects. [4] 3. Financial Ratios: TSLA's financial ratios, such as PE, EV/EBITDA, and ROE, are compared to peers and industry benchmarks. [7] 4. Price Relative: TSLA's stock is compared to the S&P 500 and other tech peers in terms of valuation multiples. [18] 5. Rating Distribution: HSBC's rating distribution for long-term investment opportunities is presented, showing the percentage of ratings assigned to Buy, Hold, and Sell. [51] 6. Share Price and Rating Changes: TSLA's share price performance and rating history are discussed, showing changes over time. [52] 7. Disclosures: Important disclosures related to the report, including analyst certifications and potential conflicts of interest, are provided. [45-58] 8. Disclaimer: The report includes a disclaimer stating that the opinions contained within are based upon publicly available information and are subject to change without notice. [65]