Tesla is navigating potential headwinds in the third-quarter as planned factory shutdowns and tepid demand cast a shadow over the electric vehicle (EV) manufacturer’s delivery projections. Analysts are sounding alarm bells in the lead-up to the company’s quarterly report, which is expected to be released as early as Sunday.
Several major brokerages, including Barclays, Baird, and Guggenheim, have raised concerns over the looming delivery shortfall. These concerns stem from temporary downtime in Tesla’s manufacturing facilities in Europe and China. The factory closures are part of a strategic retooling effort aimed at upgrading equipment and preparing for the production of Tesla’s highly anticipated new Model 3 sedan and the rugged Cybertruck.
Industry experts estimate that Tesla is likely to deliver between 439,200 and 455,000 vehicles in the September quarter. This projection falls short of Wall Street’s collective expectation of 458,713 vehicles, as reported by an average of 11 analysts’ estimates from London Stock Exchange Group (LSEG). If these estimates hold true, it would mark the first sequential decline in Tesla’s deliveries since the second quarter of 2022.
Despite these challenges, there remains a glimmer of hope on the horizon for the electric automaker. The ongoing retooling efforts are expected to rejuvenate Tesla’s vehicle lineup, positioning it for stronger competition against domestic rivals such as Ford and global giant BYD in the lucrative Chinese EV market. However, some analysts remain cautious, believing that Tesla might need to further slash prices to stimulate sales amidst growing competition and a broader slowdown in global electric vehicle demand. Such a move could come at the expense of Tesla’s industry-leading profit margins.
Tesla has already made price adjustments, reducing the prices of its Model S and Model X and offering increased discounts on its Model 3 and Model Y, with some discounts exceeding $5,000 in the United States. Additionally, the company has scaled back its production plans at its German factory due to subdued demand.
Nevertheless, optimism lingers, primarily fueled by the impending launch of the revamped Model 3. This updated model boasts a higher price point and is set to debut in key markets such as China and Europe, where early reviews have been overwhelmingly positive. Reports of extended wait times suggest a strong appetite among consumers for the refreshed Model 3.
In a somewhat unexpected twist, the ongoing autoworkers’ strike at the Detroit Three automakers—General Motors, Ford, and Stellantis—could potentially provide a safe haven for Tesla investors seeking shelter from the turbulence in traditional automotive markets.
Tesla shares have faced headwinds of their own, declining approximately 5% this month on expectations of a delivery shortfall. However, it’s worth noting that the company’s stock has nearly doubled in value over the course of the year, showcasing the enduring appeal of electric vehicles and Tesla’s place at the forefront of the EV revolution.
As the much-anticipated third-quarter report from Tesla approaches, there are growing concerns about the company’s capacity to meet its delivery projections.As it grapples with factory shutdowns and evolving market dynamics, the forthcoming report holds the key to discerning whether Tesla can surmount these challenges and continue its trajectory of innovation and expansion.
Source: Reuters
