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Tesla stock dipped Wednesday as an analyst said competition from other auto makers is cutting into sales of its higher-end vehicles.



Shares of Tesla (ticker: TSLA) were recently off 1.9% to $221.49 as the S&P 500 rose nearly 1%. Bernstein’s Toni Sacconaghi wrote Wednesday that new competitors’ vehicles may be hurting Tesla sales rather than growing the overall electric vehicle market.

”The deteriorating sales trajectory of the Model S and X may be primarily due to competition, particularly in Europe, from Jaguar and Audi,” wrote Sacconaghi. “Despite the introduction of new offerings from Jaguar and Audi, high-end (above $60,000) EV sales have not increased, but rather the [Jaguar] I-Pace and [Audi] e-Tron appeared to have displaced units from Tesla.”

The I-Pace was among the earlier European challengers to Tesla’s position in the industry. More are on the way. Meanwhile, second-quarter deliveries of Tesla’s Models S and X were around 18,000, up from the first quarter, though down year-over-year.

Tesla CEO Elon Musk said in July that, over time, those models are expected to be “not all that important” in terms of the total volume of vehicles the company sell. At present, however, their higher prices help sustain margins, with the Model 3 and coming Model Y the more affordable options.

“Make no mistake, the Model 3 remains Tesla’s most important product,” Sacconaghi wrote. “In 2019, the mass-luxury Model 3 will likely account for over half of the company’s revenues, more than double the contribution of the high-end luxury Model S and X. Nonetheless, the S and X remain the primary reason why Tesla returned to lossmaking status year-to-date.”

Some of the drag on Tesla’s shares might still be from Tuesday’s news that retailer Walmart (WMT) sued the company in a New York court, alleging “gross negligence” in its installation and maintenance of solar panels at several of the company’s stores. A Tesla spokesman didn’t immediately respond to Barron’s request for comment.

Sacconaghi has a Market Perform rating and a $325 price target on Tesla stock; FactSet’s average is $265. Tesla stock is down about 32% in 2019 through Tuesday’s close.

Email David Marino-Nachison at david.marino-nachison@barrons.com. Follow him at @marinonachison and follow Barron’s Next at @barronsnext.

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