Is the electric car boom over? Multiple investment banks lower Tesla's growth expectations.

Zhitong App noticed that Wall Street's outlook for Tesla (TSLA.US) is rapidly becoming gloomy, with at least two analysts becoming more cautious about the company's prospects in just two days.

Analysts say that by 2024, some of the electric vehicles produced by Tesla may no longer qualify for government subsidies in the United States and some European countries. This will further pressure the company's revenue at a time when demand for these vehicles is already slowing down.

Analyst Matt Portillo of Tudor, Pickering, Holt & Co. downgraded Tesla to "sell" on Tuesday, stating, "If Tesla continues to drive growth next year, losing these incentives may increase the risk of further price reductions." Portillo also predicts that Tesla's deliveries in the last three months of 2023 will be lower than analysts' average expectations.

The latest pessimistic comments from analysts further indicate that Wall Street's view of Tesla's performance is deteriorating. Data collected shows that analysts' average profit forecast for the company's fourth quarter has decreased by over 55% compared to 12 months ago, while profit expectations for 2024 have dropped by 43% compared to the same period last year.

In terms of sales, analysts on average expect Tesla to deliver over 481,000 electric vehicles in the quarter ending on December 31. Portillo expects this number to be around 470,000. Tom Narayan, an analyst at RBC Capital Markets, expects Tesla to deliver approximately 476,000 vehicles and rates Tesla as "buy".

On Monday, Narayan lowered his delivery volume expectations for Tesla in 2024 and 2025 to reflect "more moderate growth" in Model 3 and Model Y sales, citing increased competition and the loss of federal incentives as unfavorable factors. Narayan stated that some models of Tesla's Model 3, which are targeted at the mass market, will lose all federal tax credits next year.

Portillo of Tudor said that the company may face similar issues in France and Germany. After Tesla released its third-quarter results in October, it was widely expected that demand for electric vehicles in the entire industry would slow down. In addition to this, subsidy issues will also arise.

Following these warnings, traditional automakers such as General Motors (GM.US) and Ford (F.US), car rental company Hertz (HTZ.US), and several electric vehicle suppliers have also made similar pessimistic predictions about electric vehicles.A significant reason for the overall weakness in the electric vehicle market is that the group of enthusiastic early adopters who are eager to purchase new technology may have become exhausted, while mainstream buyers remain cautious due to the high prices and the still-developing electric vehicle ecosystem.

In a report to clients on Tuesday, Cowen analyst Jeffrey Osborne wrote, "Since 2022, the average price of new electric vehicles has dropped by about 21%, but consumers are still hesitant to buy electric vehicles, with most citing battery reliability, lack of available public charging stations, and the time required for a full charge as the main psychological and physical barriers they cannot overcome."

As a result, Tesla, which only sells electric vehicles, has seen a decline in profit and revenue expectations. Portillo and Narayan are not the only analysts concerned about Tesla's prospects for next year.

Last Friday, Deutsche Bank analyst Emmanuel Rosner stated that the "greater risk" facing Tesla is that its growth and profitability in 2024 may be lower than expected, given the slowdown in electric vehicle adoption.

Tesla's stock rose 1.9% on Tuesday, bringing its year-to-date gain to 108%. However, its performance this quarter has been disappointing, reflecting the deteriorating outlook for electric vehicle adoption in 2024. Since the end of September, Tesla has risen by about 2%, while the total return of the S&P 500 index is 11.5%.