With Tesla, there’s a fine line between love and hate. While fans unwaveringly follow the visions of Tesla CEO and founder Elon Musk, critics bemoan the boss’s often grandiose forecasts. And rightly so, given that Musk has frequently had to row back in the past, most recently regarding the highly praised cybertruck. The first models of the futuristic vehicle were delivered at the end of 2023, a full two years late. The target revealed previously – reaching an average annual growth rate of 50% over several years – also now seems to be off the agenda. Indeed, it was not even mentioned when the most recent figures were presented. On the contrary, the company warned that the growth rate for sales could turn out “much lower” in 2024 than in 2023. This could see the brand lose even more of its sheen. In the fourth quarter, Tesla had to cede its leading position in the e-car market to the Chinese company BYD, which has a diverse and low-cost range of models.
Nevertheless, Tesla is not standing idly by – it is pepping up its cars in order to attract new customers. The group is currently working on the next generation of vehicles. According to news agency Bloomberg, the changes to the Model Y should be similar in extent to those of the Model 3, which was modified in the form of a visual and technical facelift last year. Production of the first revamped Y models, to be developed as part of “Project Juniper”, is to begin in the gigafactory in Shanghai around the middle of the year and enter the Chinese market. And that's not the whole story: insiders reckon that Tesla is also about to launch an affordable electric car. The new model is to go into production under the code name “Redwood” in mid-2025. If rumours are to be believed, it will be a compact crossover. Tesla is said to have told suppliers it expects a production to reach 10,000 vehicles a week. Musk himself had stated at the shareholders’ meeting in May last year that the group was working on two new products with the potential for total sales of 5 million vehicles a year. It remains to be seen whether the billionaire will provide further details at this year's meeting.
Since so much is still up in the air, the current tumble in demand is unlikely to be overcome any time soon, especially as the electric car market seems to remain mired in crisis. This is evident from the latest figures from GM, which pointed to surprisingly robust demand for conventional vehicles. “The combustion engine continues to do well,” say the analysts at investment consultancy Evercore ISI. In light of this outlook, then, the Tesla share could continue on its way with the handbrake on or even go into reverse over the next few months. A new autocallable barrier reverse convertible with an inverse structure fits perfectly into this scenario.
The inverse autocallable BRC permits a partially protected short strategy. The structure is just as effective and easy to understand as that of a classic BRC. Payment of the coupon, for instance, is guaranteed, meaning that investors can look forward to a dividend every three months. The product is offered in two currencies: the Swiss franc version comes with a coupon of 14.50% p.a., while the US dollar one delivers as much as 17.50% p.a. The critical difference is in the barrier, which is above the current price of the underlying. This means that the nominal, and hence the maximum achievable gain, would only be at risk if the Tesla share were to accelerate too sharply. The threshold is 150%, a comfortable distance away from the current quotation. The autocallable function also makes early repayment a possibility. This occurs if the underlying is below the autocall trigger level of 100% on one of the quarterly review dates, the first of which comes after 6 months. Should Tesla hit the barrier, the repayment would depend on the performance of the share.
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