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Credit Suisse says Tesla is running out of time as the major electric car maker – shares to dive 40%

Key Points
  • "For all the competition entering the market we are still awaiting the EV that will be a true competitive threat to Model 3 – especially in the US," Credit Suisse analyst Dan Levy says.
  • Despite the bullish statement, Credit Suisse remains one of Tesla's skeptics, with an underweight rating on the stock, and that's in part because of Ford.
  • "Ford's new [electric vehicle] should provide a more compelling alternative at the Model 3 price range than the other comps, especially given the performance focus," Levy said.
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Credit Suisse on Thursday noted that Tesla has nearly an 80% share of the U.S. market for electric vehicles but the firm expects that the automaker's "unique position" with its Model 3 will face a serious challenge from Ford next year.

"For all the competition entering the market we are still awaiting the EV that will be a true competitive threat to Model 3 – especially in the US," Credit Suisse analyst Dan Levy wrote in a note to investors. "Tesla has a window of opportunity now with a clear competitive lead."

While a statement like this may be common among Wall Street's bullish Tesla analysts, Credit Suisse remains one of the company's skeptics. Credit Suisse has had an underweight rating on Tesla shares since the firm began covering the stock in June, with a $200 price target. That's more than 40% below the stock's close on Wednesday at $346.11 a share.

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"Yet to the extent Tesla continues to struggle with the basic 'blocking and tackling' of the auto business (i.e., manufacturing, delivery logistics, service), it risks not capitalizing on this opportunity," Levy said.

He believes Tesla will soon face a key test as "the only game in town," as Ford is expected to announce the Mach-E on Sunday, a line of a Mustang-inspired electric SUVs.

"The launch marks the first real milestone in Ford's increased emphasis in electrification, and more importantly marks an increased effort by the legacy US automakers to be relevant in electrification," Levy said.

Ford's Mach-E will be available in the U.S, Canada and Europe next fall. Credit Suisse estimates the Mach-E will be priced "in the mass luxury range" between $40,000 and $50,000, with an expected 300-mile range.

"Ford's new BEV should provide a more compelling alternative at the Model 3 price range than the other comps, especially given the performance focus," Levy said.

— CNBC's Michael Bloom contributed to this report.

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