Wall Street Bullish on Tesla (TSLA) Delivery Numbers
Will Tesla Inc. (TSLA) deliver? The electric car maker is slated to report its delivery numbers for this quarter next week. While it has tailwinds in the form of favorable regulation for electric vehicles (EVs) in its markets, the company has faced production challenges related to the pandemic.
In the July quarter, Tesla delivered 201,250 vehicles—the first time it surpassed 200,000 deliveries in that time period. Wall Street analysts are expecting the company to best that figure this time around. The consensus estimate for Tesla deliveries is between 220,000 and 225,000 cars.
Key Takeaways Analysts are predicting a record quarter for deliveries from Tesla next week, when the car maker reports numbers.
The Wall Street consensus estimate is for the company to deliver between 220,000 and 225,000 cars this quarter.
Tesla has been beset by the same problems as other car makers during the pandemic but has been quick to recover, say analysts.
Credit Suisse’s Dan Levy is an example of the consensus view. He has predicted delivery numbers of between 225,000 to 230,000 with a mid-point estimate of 228,000, writing that even reaching the mid-point estimate would be “impressive amid the chip shortage.”
But some analysts, like Piper’s Alexander Potter, predict that Tesla will race past that figure and reach 233,000 EVs delivered for this quarter. Potter has based his estimate on increased demand for EVs in Europe and China.
“EVs now represent 12% of trailing 3-month vehicle sales in China, followed by 10% in Europe and 3% in the United States. EV penetration has trended steadily higher in recent months, especially in Europe and China,” Potter wrote in a recent report.
According to statistics released by the China Passenger Car Association (CPCA) earlier this month, Tesla sold 44,264 units made in China to local markets and overseas in August. That figure represents a 275% year-over-year increase.
Meanwhile, GLJ Research analyst Gordon Johnson wrote that Tesla will make 223,000 deliveries. Johnson is a Tesla bear and has a $67 price target for its stock. And Morgan Stanley analyst Adam Jonas, a notable bull, settled for a delivery figure of 212,000 cars for the third quarter in a July note.
A Pandemic of Problems
Like other automakers, Tesla has had to contend with adverse operating circumstances during the pandemic. During the company’s last earnings call, CEO Elon Musk had called chip shortages “the governing factor” in Tesla’s output and said that the company’s growth rates would be determined by chip availability. Other supply chain kinks, such as expensive or unavailable raw materials, have also played a part in delaying production of its cars or making them more expensive for certain markets.
But the company has been quick to recover, say analysts. “Tesla appears to have been less impacted by the shortage than other (automakers),” Credit Suisse’s Levy wrote, referencing the company’s new microcontrollers and vehicle software as examples.
CEO Musk recently told audiences at a talk that the car industry’s chip shortage problems are only “short-term” and would end by next year. “There’s a lot of chip fabrication plants that are being built, and I think we will have good capacity by next year,” he said.
Despite the shortages, Tesla’s Shanghai plant, which also exports to Chinese-made vehicles to Europe, has also managed to maintain a steady output. On an overall basis, the Shanghai factory shipped roughly 240,000 vehicles during the first eight months of this year. Sources told Reuters that the total will inch up to 300,000 vehicles by the end of September.
Producing impressive delivery numbers, however, is no guarantee for a rise in Tesla’s stock. Instead, investor expectations have varied based on estimates and Tesla’s performance relative to forecasts.
For example, the company reported record deliveries in July, but the stock failed to budge. Observers opined that the company had failed to cross “a line in the sand” by reporting delivery numbers that were only slightly better than their estimates. The stock also tumbled by 7% in 2019 after the company only barely managed to beat analyst expectations.
Tesla (TSLA) Turns On the Charm in China
Electric carmaker Tesla, Inc. (TSLA) is on a charm offensive in China. Elon Musk, the company’s CEO, recently lauded Chinese electric car makers, calling them “the most competitive in the world.” He has also committed to increasing investments toward the manufacturing and research of electric cars in the country. His company has promised to build a data center in China to ensure that consumer data of its citizens does not travel outside the country.
Tesla’s China tilt may seem surprising and belated after a relatively successful debut last year. But the company’s efforts are an attempt to patch up relations with the ruling party and arrest a precipitous decline in its car sales in the country.
Key Takeaways Tesla has made several recent moves to please the Chinese government.
The moves may be part of a broader push to reverse the spate of negative reviews and publicity the company has generated this year.
China is an extremely important market for Tesla.
Tesla has been buffeted by a spate of negative reviews and bad press this year. In March, customers protested outside its showrooms, claiming quality problems with its vehicles. Then, it was summoned by Chinese regulators who opened an investigation into its vehicles for quality issues. A fatal May crash between a Tesla car and a truck made matters worse. Safety issues are not the only problem plaguing Tesla in China. The country’s military also banned Tesla vehicles from its facilities due to privacy concerns.
The developments have taken the shine off sales for Tesla vehicles. During the period between March and April, sales plunged by 60% from the previous months, according to data from the China Passenger Car Association (CPCA). By August, they were down by 69%, and the company had made only 8,621 deliveries to Chinese customers. The remaining production at its Shanghai plant was made for exports.
Meanwhile, the number of competitors to Tesla has multiplied. They include publicly listed companies like XPeng Inc. (XPEV) and NIO Inc. (NIO). According to reports, the sales of these competitors have surged as Tesla has lost ground in China’s electric vehicle (EV) market.
A Reversal of Fortunes
Tesla’s current problems represent a change in its fortunes from 2020. China rolled out the red carpet for the company. It was the only automaker allowed to wholly own its subsidiary in China, and the Model 3 became a best-seller in 2020. In a country where its Model 3s, which are targeted at economy passengers, are considered premium vehicles, Tesla received generous subsidies from the government. “We are currently the leader in the Chinese EV market. So, I think we must be doing something right,” CEO Musk told analysts during a January earnings call.
For all its woes, Tesla still leads the luxury car market for electric vehicles in China. It is also among the leaders in the overall EV market. The company’s push to redress relations with the government is one among several initiatives to increase its presence and market share in the country. It has already released a cheaper version of its Model Y SUV Crossover for customers in the country. According to a report in January, the company is also planning to introduce a $25,000 car especially for the Chinese market.
China is already the world’s biggest market for electric cars and is expected to maintain its lead in the near future. Tesla has said that it expects to have average annual growth of 50% “over a multiyear horizon” in the Chinese market. The CPCA has forecast a sales figure of 280,000 for Tesla in 2021.
Tesla superbull Cathie Wood calls out GM amid TSLA’s blockbuster Q3 results
By
Tesla (NASDAQ:TSLA) superbull Cathie Wood of ARK Invest recently made some keen observations for investors following the automaker’s release of its Q3 2021 vehicle production and delivery report. Specifically, the ARK Invest founder pointed out Tesla’s notable increase in US car sales and GM’s decrease in the third quarter, despite the ongoing chip shortage.
“Today, $TSLA announced that in the third quarter it sold 241,300 vehicles globally, up 73% year over year (YoY) and 20% quarter over quarter (QOQ),” Wood’s stated in a recent tweet. “Meanwhile, $ GM blamed the ~33% YoY decline in its US sales on chip shortages. What? # EVs require 3-5x more chips per car produced!”
Today, $TSLA announced that in the third quarter it sold 241,300 vehicles globally, up 73% year over year (YoY) and 20% quarter over quarter (QOQ). Meanwhile, $GM blamed the ~33% YoY decline in its US sales on chip shortages. What? #EVs require 3-5x more chips per car produced! — Cathie Wood (@CathieDWood) October 2, 2021
Shortly after the third quarter ended, Tesla released its production and delivery numbers. In the third quarter, Tesla produced 8,941 Model S/Model X while delivering 9,275 of them. The company also produced 228,882 Model 3/Model Y units, delivering 232,025.
In total, Tesla produced 237,823 and delivered 241,300 cars in Q3 2021. In the second quarter, Tesla produced a total of 206,421 vehicles and delivered 201,250. While in the first quarter, the EV maker produced 180,338 units and delivered 184,800. As can be gleaned by Tesla’s quarterly production and delivery reports, the company’s numbers are steadily rising quarter over quarter.
Meanwhile, GM reported delivering 446,997 vehicles in the United States in the third quarter, down 218,195 units compared to 2020. In the first quarter, GM reported that all of its US brands had seen double-digit increases YoY in retail sales. It sold 642,250 vehicles in the US in Q1 2021. Total sales were up 4% compared to April 2020. In July, at the end of the second quarter, GM reported an increase of 40% compared to a year ago.
The legacy automaker cited semiconductor “supply chain disruptions and historically low inventories” as the reason for the decrease in US sales.
“The semiconductor supply disruptions that impacted our third-quarter wholesale and customer deliveries are improving. As we look to the fourth quarter, a steady flow of vehicles held at plants will continue to be released to dealers, we are restarting production at key crossover and car plants, and we look forward to a more stable operating environment through the fall,” noted Steve Carlisle, the executive vice president and president of GM North America.
Disclaimer: I am long TSLA.
The Teslarati team would appreciate hearing from you. If you have any tips, reach out to me at [email protected] or via Twitter @Writer_01001101.
Tesla superbull Cathie Wood calls out GM amid TSLA’s blockbuster Q3 results