UBS says Audi's new electric car shows industry has a long way to go to catch Tesla

  • UBS believes Tesla's lead in electric vehicle technology may last longer after seeing Audi's latest offering.
  • The Audi "e-tron underscores that catching up with Tesla is more difficult than expected by many," analyst Patrick Hummel says.

Audi's launch of its e-tron car revealed how far behind the competition is compared to Tesla, according to UBS.

On Monday, Audi unveiled the e-tron SUV which will hit the market next spring. UBS, one of Tesla's biggest skeptics, admitted the widely-anticipated European competitor's car fell short in terms of performance.

The Audi "e-tron underscores that catching up with Tesla is more difficult than expected by many," analyst Patrick Hummel said in a note to clients entitled "Audi e-tron launch - another lap Tesla wins" Tuesday. "While we appreciate that a solid EV product is not only about acceleration and range, there is still a gap to Tesla in the powertrain efficiency ratios that reflect the degree of innovation. The electric powertrain is not a commodity yet and Tesla might be able to sustain its lead for longer."

Tesla shares closed down 3.4 percent Tuesday to $284.96. Its stock is down 5 percent this year through Monday versus the S&P 500's 8 percent return.

Hummel noted the e-tron will get 30 miles to 50 miles less range than the Tesla Model X and will accelerate "significantly slower." He said the Audi electric vehicle's disappointing metrics will hurt its sales and benefit Tesla.

The new Audi E-Tron unveiled. 
Meghan Reeder | CNBC
The new Audi E-Tron unveiled. 

"At the margin, the not-so-impressive key stats could dampen the sales outlook and make it more difficult for Audi (or the premium OEMs in general) to break even with their EVs," he said. "This plays into Tesla's hands and in China, into the hands of the emerging local EV players."

Despite the meager competitive threat from Audi, Hummel reiterated his sell rating on Tesla shares due to his forecast for Model 3 sales next year.

"We think Tesla will not create enough Model 3 demand at the envisaged price point of >$50k, which would be required to meet 2019 consensus expectations," he said.

The analyst affirmed his $190 price target for Tesla shares, representing 36 percent downside to Monday's close.

Tesla did not immediately respond to a request for comment.

— CNBC's Michael Bloom contributed to this story.

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