Tesla’s position as a pioneer in the electric vehicle (EV) industry means that its quarterly delivery results are followed closely by investors, analysts, and enthusiasts. But planned factory shutdowns and soft demand that led the automaker to boost discounts may have the company missing estimates when it reports third-quarter deliveries later this week.
In the run-up to Tesla’s report, several Wall Street analysts warned that a combination of production and delivery challenges could send shares down. Among those was Barclays analyst Dan Levy, who cut his deliveries estimate to 440,000 vehicles from a previous forecast of 462,000 and said that he now expects production to be down about 16% from the year-ago period. He blamed downtime at Tesla’s plants in Europe and China to upgrade equipment and prepare for the production of the updated Model 3 sedan and its Cybertruck pickup.
Similarly, Deutsche Bank analyst Emmanuel Rosner said there is “meaningful downside risk to current 2024 delivery and production expectations,” as the company might struggle to meet its 50% sales growth target due to limited capacity. He said the company is limiting output at its Shanghai plant in China, which produced half of its Model 3 cars in the first half of this year. He also pointed to a statement from CEO Elon Musk, who has predicted lower year-over-year production and delivery numbers than Tesla’s initial guidance in 2017.
Then there are the discounts. The company has been offering steep price cuts on its U.S. inventory cars and in some markets, such as China, where it has been trying to clear slowing sales. It’s a tactic that many traditional automakers have used to juice sales and clear out lingering inventories.
However, some analysts have questioned whether the discounts compensate for a lackluster quarter and whether a slowdown in EV sales is catching up with Tesla. “It’s a tough call,” said Thomas Martin, senior portfolio manager at Globalt Investments, which holds Tesla shares. “It’s not like you want to put your money into Ford or GM right now.”
The Tesla stock dropped 0.5% in premarket trading toward a one-month low on Wednesday after Baird analyst Ben Kallo projected that the company would deliver just 439,200 vehicles in the third quarter. That’s below the overall average of 11 analysts surveyed by LSEG.
Some analysts pointed out that a disappointing report might lead to further price cuts for the company, which would hurt its profit margin and its efforts to establish itself in the pickup market with its new Semi truck launch. That could further slow a market grappling with slowing global GDP growth and weakening auto sales in China and other major economies. But a few others said the upcoming report would be a good opportunity for the market to digest a more mature Tesla and see how the company performs in various conditions.