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Barclays Predicts Tesla Q3 Deliveries to Fall Short of Consensus Expectations

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Tesla's Third-Quarter Deliveries Expected to Fall Short, According to Barclays

Barclays analysts anticipate that electric vehicle manufacturer Tesla will face challenges in its third-quarter production and delivery numbers before experiencing a recovery in the final three months of 2023. In a note written by analyst Dan Levy, he states that while third-quarter deliveries are expected to be modest compared to recent results, they are projected to be sufficient to reduce inventory amidst a further slowdown in production. Barclays predicts that Tesla will deliver 455,000 units in the third quarter, which is below consensus expectations of 463,000 units and Barclays' previous estimate of 483,000 units.

Factors Contributing to the Decline

Levy highlights several factors that may contribute to the decline in Tesla's delivery numbers. He notes that this would be the company's first sequential decline in production since the introduction of the Model 3 in 2017, excluding quarters affected by Covid-19 disruptions. Additionally, there is expected to be a sharp decrease in September deliveries compared to June deliveries, and pressure in China and Europe as Shanghai transitions to the new Model 3 with an extended driving range. The slowdown of Tesla's new facilities is also a concern for future production ramps.

Challenges and Pricing Measures

Levy acknowledges that Tesla has implemented pricing measures to offset weak demand, including higher discounting on U.S. inventory vehicles and significant price cuts on Model S, Model X, and some Model Y cars. However, despite these efforts, demand remains soft. Looking ahead, Levy believes that the fourth quarter holds potential for volume recovery, with higher global Model 3 sales and Cybertruck deliveries serving as catalysts. However, questions surrounding the price elasticity of demand and Tesla's reliance on future models like the Model 2 and AI technology continue to impact the near-term outlook. In conclusion, Barclays' predictions suggest that Tesla may face challenges in meeting delivery expectations for the third quarter. While the stock has experienced significant growth this year, the current quarter has seen a decline. The company's ability to navigate these challenges and capitalize on future opportunities will be crucial in determining its performance going forward.

Implications of Tesla's Projected Delivery Shortfall on New Business Formation

Barclays' forecast of Tesla's third-quarter delivery shortfall provides valuable lessons for new businesses, particularly in the electric vehicle (EV) industry.

Production and Delivery Challenges

Tesla's expected delivery shortfall, as predicted by Barclays, highlights the importance of managing production and delivery challenges. New businesses must be prepared for fluctuations in production and demand, and have strategies in place to maintain operational efficiency.

Impact of External Factors

External factors, such as Covid-19 disruptions and market transitions, have contributed to Tesla's projected decline. This underscores the need for new businesses to remain adaptable and responsive to external influences that could impact production and demand.

Strategic Pricing Measures

Despite facing soft demand, Tesla has implemented strategic pricing measures to offset the impact. This approach could be a valuable strategy for new businesses facing similar demand challenges.

Future Outlook

Looking ahead, Tesla's potential for volume recovery in the fourth quarter, driven by higher global Model 3 sales and Cybertruck deliveries, offers a positive outlook. However, questions surrounding price elasticity of demand and reliance on future models continue to impact the near-term outlook. This serves as a reminder for new businesses to balance short-term challenges with long-term growth strategies. In essence, Barclays' predictions for Tesla's third-quarter deliveries offer valuable insights for new businesses. By understanding and navigating these challenges, new businesses can better position themselves for success in the competitive EV industry.
Story First Published at: https://www.cnbc.com/2023/09/25/tesla-third-quarter-deliveries-will-miss-expectations-barclays-predicts.html
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