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However, Black believes that as Tesla's auto gross margins bottom out and the company launches a new $25-30,000 compact model to increase its total addressable market (TAM), analysts will start increasing their earnings per share estimates again. This, in turn, should lead to higher analyst valuations and price targets for Tesla's stock.

Unpacking the "Covid Surge Pricing" Effect

Jeff Lutz provided a detailed explanation of the "Covid surge pricing" phenomenon that impacted the auto industry. He described how supply chain disruptions and material shortages during the pandemic led to increased costs for automakers, which they then passed on to consumers through higher prices.