Shares of Tesla (NASDAQ:TSLA) are lower in premarket trading after last night's Model Y event in Los Angeles.
On the positive side, the Model Y crossover is aimed at one of the hottest segments in auto. Bank of America Merrill Lynch estimates that 40% of all new model launches in the U.S. market between model years 2019-2020 will be crossovers. However, BAML also 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 best efforts to meet hot CUV demand with a mass-market oriented Model Y, the company could run into challenges (similar to the Model 3 currently) in driving substantial volume at high-range/price points, while an aggressive push of lower range/price models could result in material profit and cash flow pressures," reads BAML's note.
BAML wasn't the only firm slightly underwhelmed by the Model Y event, CFRA Research and Canaccord Genuity have also issued cautionary notes this morning.
Looking ahead, the biggest thing missing from the splashy unveiling of the Model Y prototype was details on where exactly the Model Y would be produced. Investors were left wondering if Model Ys are slated to be made in Fremont, at the Gigafactory, over in Shanghai or some combination of the three.
There is also the sentimental tone of Elon Musk's presentation last night to consider and his highlighting of the difficulty in working out mass market production kinks. Could it be that an experienced auto heavyweight will be hired at Tesla to run operations in the future?
TSLA -2.67% premarket to $282.22 to erase the one-week gain built up ahead of the event.
Previously: Tesla Model Y Event - Live updates (March 14)
Now read: Will The Model Y Bankrupt Tesla? »
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