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 although the company seems to be on fire right now Tesla is still king of electric vaginals but it may not be able to hold its Crown much longer if it doesn't address these two huge problems heading into 2023 you're watching trade daily like And subscribe for more daily Tesla stock market news EV giant faces big challenges in its two Mega markets if you think 2022 has been a trying year for Tesla with the stock down 65 percent buckle up the global EV giant faces different Dynamics in the

two Mega markets it serves but in both cases they add up to sizable challenges for Tesla in 2023 the two Mega markets for Tesla are North America and everywhere else throughout North America EV competition remains relatively light and in the U.S new EV credits should bolster Tesla demand in 2023 but it's a different picture in the rest of the world China EV subsidies and deck 31 and several European countries also are cutting or scrapping subsidies at the same time competition is ramping up across Eurasia especially in China

these two broad markets do share one thing a weak economy in the new year will weigh on EV sales worldwide Tesla's pricey offerings are particularly vulnerable to a cool down the brakes are screeching on EV demand Morgan Stanley analyst Adam Jonas wrote deck 14. within Autos we believe the shift in the balance of Supply slash demand for EVS has the potential to take investors by surprise Jonas and several other analysts see Tesla price Cuts in the coming year picking up from outright Cuts or other

discounts in late 2022 a drop in Tesla's global average selling prices to around fifty thousand dollars in 2023 from 53 500 in Q3 2022 does not appear in plausible Bernstein analyst Tony sakanaki recently wrote these factors along with concerns about CEOs Elon musk's Focus since his four to four billion dollars Twitter takeover has sent Tesla stock plunging as 2022 winds down while sales and profits continue to grow at PACE many companies could only dream of they are slowing Wall Street

forecasts 2022 full year earnings advancing 80 to 4.07 dollars per share after surging 22 percent in 2021 sales should jump 55 to 83.3 billion dollars down from a 71 percent gain in 2021. meanwhile in 2023 analysts expect Tesla earnings per share to grow a cooler 40 to 5.66 dollars with sales of 42 percent to 118.2 billion dollars that's a strong Pace but the era of triple digit growth and idea of unlimited demand that long-fueled Tesla stock may be over meanwhile the company faces risks to the

downside Tesla has major sales in North America Europe and China it has notable business in Korea Japan Australia and some other Asian markets the company builds its cars at plants in Fremont Calif Austin Texas Shanghai and Berlin Tesla Remains the world's largest maker of fully electric battery EVS with a commanding BV lead in North America but China EV Giant byd already far above Tesla in BV and plug-in hybrid sales combined will likely overtake its U.S rival in global BV deliveries in 2023 for now Tesla

Remains the most profitable EV maker due to its high vehicle prices while we see 2023 as a challenging year for the EV Market categorically We Believe Tesla's Gap to competition can widen Morgan Stanley's Jonas has said Tesla Remains the dominant EV maker at home through the first nine months in 2022 65 percent of the 525 000 registered EVS in the U.S were Tesla vehicles according to data released in November by S and P Global Mobility the original Fremont plant is bursting at the tent seams Fremont makes the model 3

and model y as well as the luxury Model S sedan and model X SUV the fromit factory can produce up to 550 000 model 3 in model y Vehicles a year according to Tesla it also has capacity to build up to 100 000 Model S and model X Vehicles the newer Austin site has a planned capacity of 250 000 vehicles Tesla Austin is currently ramping up model y output which should help profit margins as the plant nears capacity Austin is set to make the Cyber truck when that vehicle comes online perhaps in mid to late 2023 but the oft delayed

truck isn't likely to be a volume contributor next year Tesla is also finalizing plans to build an auto assembly plant in northeastern Mexico Bloomberg reported this month Tesla's U.S price is unquestioned currently General Motors is producing the GM bolt and bolt euv in decent numbers but in price and features these are subtests like EVS so is the Volkswagen id.4 now produced in Tennessee the Ford Mustang Machi Hyundai ionic 5 and Kia ev6 are intriguing crossover Rivals to the model y but

overall volumes are still fairly light Ford Maki production is set to ramp up in 2023 while the moderately priced Fisker ocean SUV will enter the market by late 2023 General Motors aims to have several EVS with its new Altium batteries on the market Ford is also looking to expand production of the all-electric F-150 Lightning pickup truck to an annual run rate of 150 000 units by fall 2023. through the end of November the company sold 13 258 F 150 lightning units multiple price hikes have pushed the

entry-level lightning price to nearly 56 thousand dollars up forty percent vs the original 3974 dollars that reflects the Lightning's popularity but also its scarcity and high costs for batteries the bottom line is that volume EV production especially of head-to-head Rivals to Tesla vehicles may not come until 2024 or later but overall competition to win over American car buyers will heat up total U.S auto production should pick up in 2023 as chip shortages and other supply chain was fade prices of used cars

including Tesla EVS are coming down still expectations are high that Tesla sales will rise significantly in the U.S next year Tesla should get a boost in 2023 from new EV tax credits of up to seven thousand five hundred dollars per vehicle from the inflation reduction act income and vehicle price caps however could limit Tesla vehicle and buyer eligibility EV credits limit eligible sedans to prices of 55 000 or less with pickup trucks and SUV capped at eighty thousand dollars Tesla will likely make permanent

price Cuts in the US to qualify for Ira rebates Bernstein's second eckie wrote the EV credits only apply to Vehicles assembled in North America that excludes Imports such as the ionic 5 and ev6 with EV credits looming many would-be Tesla owners have delayed purchases or taking delivery until 2023. Tesla on Deck 21 began offering a 7 500 credit on model 3 and model y deliveries in the US before the year end that's up from three thousand seven hundred fifty dollars at the start of the month

the EV giant also is offering free supercharger miles as another incentive elsewhere Tesla faces other challenges China Europe and other markets outside North America have many differences but for Tesla they're one big pot for two production hubs Shanghai already the biggest Tesla Factory got a big capacity expansion in Q3 the newer Berlin area plant meanwhile has been picking up production Shanghai makes the model 3 and Y while Berlin only produces the model y for now while China is a huge Tesla market for

local sales Shanghai is also the EV Giants export Hub Tesla ships some model Y and many model 3 vehicles from China to Europe as well as to markets such as Japan South Korea Australia and New Zealand as the Berlin plant ramps up that will help boost profit margins as in Austin however that benefit could be offset if Berlin's higher output Spurs production Cuts in Shanghai or Price Cuts in the Eurasian Mega Market why doesn't Tesla ship cars to the U.S from overseas plants Tesla exports from Shanghai to the U.S

would not be profitable due to a 27.5 percent tariff on chinese-made autos theoretically Berlin could export model y vehicles to the U.S but any foreign made Tesla EVS would not be eligible for the new U.S tax credits so what's the demand forecast Tesla is famously Coy about geographic sales details but Global demand is clearly one of the question marks for 2023 shanghai's Bay capacity expansion quickly raised questions about whether demand could keep up that's been a major factor behind Tesla Stock's poor

performance late in 2022 China backlogs and wait times have essentially been at zero since September China's economy is struggling after zero covered stifled the economy for much of 2022 a massive wave of infections as policies quickly ease could Royal economic activity to start the new year Tesla is also facing competition in China from Rivals byd lie Otto and Neo which are seeing sales search as they roll out new model lines Vehicles including the byd seal Neo et5 and other EVS are taking on the popular Tesla

model 3. the higher margin model y faces relatively less competition in China but that could change in 2023 bid Neo Lai Auto x-pang seeker and others are looking to move into Tesla's affordable luxury space meanwhile the Tesla Model 3 and Y are starting to age Tesla already cut model 3 and model y prices in China on OCT 24 by as much as nine percent followed by sizable year-end incentives even with China EV subsidies of 11 088 Yuan or 1593 set to end deck 31 the EV Giants local China sales have faded in December

Tesla slowed Shanghai production around deck 12 and halted output on Deck 24 through the end of the year all that raises the prospect of a tough year ahead for Tesla there in Europe the Dynamics seem more favorable at least on the surface Tesla deliveries in Europe are tracking for a record in the fourth quarter the company is ending 2022 as the Note 2 seller of all electric vehicles in the region behind only Volkswagen but wait times have shrunk amid other signs that Q4 stepped up deliveries are

drawing down Tesla's European backlogs to drive year-end sales Tesla is offering sizable discounts in the UK and free supercharger miles in Europe in addition to General economic weakness in Europe Bernstein's sakanaki wrote Tesla's lead times on its cars in Europe have been shortening pointing to slowing demand and erosion of backlog though not as pronounced as in the U.S and China permanent Tesla price Cuts in Europe are likely he says EV subsidies also are changing throughout Europe

Germany plans to reduce EV subsidies as of Jan 1. with subsidies for EVS priced at 40 000 Euros or 42 620 or above falling to 3 000 Euros which is 3196 dollars from five thousand Euros at its base price Norway is ending subsidies Sweden has just ended subsidies and UK subsidies are winding down France is increasing EV subsidies for lower income buyers but trimming subsidies for other buyers Tesla already introduced a less expensive model YSR in Europe at the end of August Piper Sandler's Alex Potter said Tesla

could feasibly run out of European buyers in the fifty thousand dollars plus price range just as localized production begins ramping in Europe thereby reducing demand for exports from Shanghai the problem is with the shaky macro and ongoing copper disruptions it's possible that Tesla may become a victim of its own success Potter wrote decade other key markets for Tesla include Japan South Korea Australia New Zealand and Israel these markets are doing relatively well but they represent just a fraction of

Tesla sales in China Europe and North America in the third quarter U.S sales made up 48 percent of Tesla's total revenue according to the company's SEC filings China accounted for about 24 percent of Q3 Revenue the rest of the world including Europe made up another 28 percent in 2021 U.S sales were four to four percent of Tesla's total revenue according to fact set China was second with 25 percent of Tesla's total revenue coming from the country Europe sales made up around seven

percent of 2021 revenues Tesla will enter the Thai auto market in 2023 offering a test case for Middle income markets in Southeast Asia and Latin America fourth quarter Tesla deliveries should reach 431 thousand according to analysts consensus that would mean roughly 1.34 million for the full year of 43 from 2021. analysts are also projecting Tesla deliveries will swell 46 percent to 1.96 million vehicles in 2023 according to fact set even with headwinds and macroeconomic challenges Tesla Q4 deliveries should

easily surpass q3's record of 343 830 EVS that was up 42 vs a year earlier but missed analysts estimates if demand were red-hot Tesla deliveries could have easily topped 450 000 in Q4 given its production capacity and existing inventory instead Tesla sales are expected to lag those levels considerably with Hefty discounts needed in its main markets analysts expect Tesla earnings per share to grow 53 percent to 1.30 in Q4 Revenue should swell 51 to 26.6 billion dollars roughly in line with the past

three quarters but the forecasts for next year call for slower earnings and sales growth ahead analysts are betting on robust Tesla profits and deliveries but the unlimited demand both thesis has taken a blow even in a bad year for the overall market and growth companies the Tesla stock sell-off stands out Tesla stock has lost more than a third of its value just in December plunging to a two-year loan Tesla shares have plunged 70 percent from the November 2021 Peak with most of that coming since

late September and mid-demand concerns and musk's Twitter purchase musk has sold 39 billion dollars worth of Tesla stocks and shares peaked in November 2021 including yet another batch of sales in mid-December big long-time Tesla stock investors are increasingly critical of musk calling on the historically quiescent board of directors to take action or even pick a new CEO on Deck 22 musk pledged not to sell any more Tesla stock through at least 2023. Tesla stock has had big sell-offs and long stretches of not advancing Tesla

stock may need months of time to repair if not longer Tesla stock has a composite rating of 37 out of 99. it has a six relative strength rating an exclusive IBD stock checkup gauge for share price movement relative to all other stocks putting it in the bottom six percent the EPS rating is 75. however despite the near-term risks and challenges facing Tesla in 2023 analysts generally remain optimistic about the EV giant we continue to believe that Tesla is well positioned for long-term top and bottom line growth given its leading

position in the EV Market Goldman Sachs analyst Mark Delaney wrote earlier this month thanks for watching this video and remember this is news entertainment not investment advice