Electric vehicle giant Tesla (TSLA, Financial) has announced its third-quarter delivery and production numbers for this year. Though Tesla saw its first quarterly sales increase of the year, the delivery count still fell short of market expectations, causing an initial stock drop of 6.4%.
The next major event for Tesla is the much-anticipated "Robotaxi" event on October 10, which aims to showcase a prototype autonomous taxi, highlighting the company's new AI-driven strategy for autonomous driving technology.
Tesla's third-quarter delivery numbers were 462,890 vehicles, slightly below market estimates of 463,897 vehicles. However, production numbers reached 469,796 vehicles, surpassing the expected 465,828 vehicles. In comparison, deliveries in the same quarter last year were 435,059 vehicles, and production was 430,488 vehicles. This shows a year-over-year delivery increase of 6.4% and a quarter-over-quarter increase of 4.3%, while production rose 9.1% year-over-year and 14.4% quarter-over-quarter.
Model 3 and Y deliveries for the third quarter were 439,975 vehicles, higher than the market estimate of 435,920 vehicles. Their production also exceeded expectations, reaching 443,668 vehicles against an estimated 434,051 vehicles. This indicates that the majority of Tesla's sales came from the smaller, more affordable Model 3 and Y, with only 22,915 units of the higher-priced Model X, S, and the new Cybertruck sold.
Delivery numbers, closely aligned with sales, are crucial metrics that Wall Street monitors. Despite Tesla achieving year-over-year sales growth this quarter, analysts argue that it doesn't fully satisfy investors. Tesla now needs to reach a record high delivery number of 516,344 vehicles in Q4 to meet last year's figure of 1.81 million deliveries. Falling short could mean an annual decline in deliveries for the first time.
For the first three quarters of this year, Tesla's sales have decreased by 2.3% year-over-year. This quarter's sales rebound was driven by price cuts and increased promotions, which could squeeze Tesla's industry-leading profit margins—a focal point in the upcoming Q3 earnings report on October 23. Analysts project Tesla's average vehicle price for Q3 to be $42,500, the lowest in four years.
Additionally, Tesla faced intense competition from other U.S. and Chinese car manufacturers, and insufficient subsidies in Europe impacted its Q3 delivery numbers. However, increased subsidies for electric vehicle purchases in China could benefit Tesla's sales in that market.
According to a report by JATO Dynamics, BMW led the European pure battery electric vehicle market for the first time in July, surpassing Tesla, whose market share is being eroded. Unlike Tesla, traditional automakers that produce hybrid vehicles might pose a significant challenge.
Wedbush's renowned tech stock analyst Dan Ives, who has a bullish stance on Tesla, remained optimistic, calling the Q3 delivery outcome "good and a step in the right direction." Nevertheless, the stock is under pressure as investors hoped for even better results.
Conversely, BNP Paribas Securities has warned that market expectations for Tesla's long-term performance might be overly optimistic, with Tesla's sales projections for 2026 and 2027 being 10% to 15% lower than market expectations. Tesla executives have also cautioned that delivery growth in 2024 will be slower than last year.
