Shares in Tesla (NASDAQ: TSLA) are lower in premar trade after last night's Model Y event in Los Angeles.
On the positive side, the Model Y transition is aimed at one of the hottest segments in the car. Bank of America Merrill Lynch estimates that 40% of all new model launches in the US market between model year 2019-2020 will be crossovers. However, BAML notes that the Audi e-tron, BMW iNEXT and Mercedes-Benz EQ will be direct competitors and in the market before Tesla. "Even with TSLA's efforts to meet the CUV demand with a mass market-oriented model Y, the company can solve challenges (similar to model 3) to run significant volume at high price / price points, while an aggressive push of lower range / pricing models can result in material profits and cash flow pressures, "reads BAML's note.
BAML was not the only company that was slightly undervalued by Model Y event, CFRA Research and Canaccord Genuity also issued warnings on this morning.
In the future, the largest missing from the splashy model Y prototype cover was details of how accurate the model Y would be produced. Investors were once again wondering if the Model Ys is slated to be made in Fremont, on Gigafactory, in Shanghai or a combination of the three.
There is also the sentimental tone of Elon Musk's presentation last night to consider and his highlight of the difficulty of working out mass market production kinks. Could it be that an experienced auto heavyweight will be employed by Tesla to operate in the future?
TSLA -2.67% premarket for $ 282.22 to delete a week's win built up before the event.
Previous: Tesla Model Y Event ̵