Elon Musk’s Tesla posts first QoQ sales drop in years

Deliveries fell to just over 435,000 vehicles in the three months to September, down 6.7% from a year earlier.Automobile manufacturers accuse Musk noted on the second-quarter earnings call that upgrades at his manufacturing plants have declined sequentially.

“Even without optimistically considering factory closures, Tesla clearly missed Wall Street and bulls were disappointed,” he said. Dan IvesManaging Director of Equity Research at Wedbush Securities.

Now hopes are on the launch of the new Cybertruck and updated Model 3 sedan, which is more than six years old, for a strong fourth quarter.

“We see better times ahead,” Ives said.

The stock initially sold off but quickly found itself in trouble as the company confirmed that its production guidance for this year of about 1.8 million vehicles remained unchanged. The remaining 450,000 remain to be built, preferably sold within the last three months – a feat that is certainly doable.

Provided by Tesla

Investors closely monitor the production and sales of each ship leaving the port of Shanghai for overseas markets. The company’s website was also scoured for any information on the size of its unsold inventory.But Tesla itself only releases global aggregate data once a quarter, so if Musk’s team has the ability, this wouldn’t be the first time be surprised by the good aspects.

Consensus estimates compiled by Tesla’s own investor relations department and released on Friday showed that the market expects deliveries to customers to fall sequentially to 454,809 vehicles in the three months to September.

While Wall Street was once more worried about production than sales, attention has turned to sales amid concerns that demand is dwindling at current prices, requiring more discounts.

Tesla contacts analysts to lower expectations

As Musk noted on the second-quarter earnings call, investors initially hoped that any drop in sales wouldn’t affect deliveries but would simply limit production.

Tesla has a large inventory of vehicles to sell, with global supply times jumping to 16 days in the second quarter from four days a year ago, when Tesla’s production capacity was still limited.

Musk has also offered incentives to spur demand, including a “one-time amnesty” for existing owners to transfer their fully self-driving software package to new cars when they trade in their cars.he went on to say Big price reduction Its high-end S and X models significantly reduce the price of the latest models Plaid Each vehicle sells for $20,000.

Optimism that sales would survive waned in early September after analyst conference calls suggested the company was quietly leading analysts to expect lower deliveries (Musk warned in May that the company would survive a surge in interest rates) , Tesla is not immune to the impact of credit depletion).

That changes for me from a season 3 ’23 prediction perspective.

Tesla IR appears to be trying to lower its delivery and production expectations for the end of the quarter. This could be a sign that they won’t be as aggressive on price in order to hit sales targets. perhaps… pic.twitter.com/6vML35VmaE

— James Cat (@TSLAFanMtl) September 7, 2023

The weak third-quarter results broke a streak of uninterrupted growth for the company. Excluding China’s strict lockdown measures last spring, Tesla’s sales continued to increase from one quarter to the next even during the first wave of the epidemic – an impressive feat considering the auto industry’s traditional seasonality.

This time, the company briefly took it upon itself in the third quarter to clear out remaining Model 3 inventory and retool its China factories in hopes of producing an updated version of the sedan, known internally as “Project Highland.” This is a major reason bulls are willing to dismiss third-quarter volume as an anomaly.

If, as analysts expect, a planned second round of sales of the Model 3 sedan is to blame, the company may still hit its guidance to sell about 1.8 million vehicles this year. Updated Model 3 and the much-anticipated Cybertruck reigniting demand.

Small updates for Model Y in China

Their arrival was also well timed.

Three of Tesla’s four vehicles were launched in mid-2017 or earlier, making them older than almost every other new electric vehicle on sale today. Despite the much-hyped delivery event of the semi-commercial truck last December, it’s currently undergoing some kind of glorious field testing with customer PepsiCo, and only a few dozen have been built.

The problem of generating enough demand first arose late last year, when Tesla went from supply shortages to suddenly find itself overcapacity, forcing it to slash prices to prevent inventory from swelling.

However, these cuts come at a cost.Tesla’s gross profit margin fell below energy business gross profit margin for the first time this year second season.

Keen observers will note that Tesla stopped reporting vehicle gross margins in its shareholder filings earlier this year, coinciding with Musk’s series of price cuts.

More important for future demand may be the impact of angering loyal customers. Owners who bought a new Tesla when demand was peaking and financed their purchase could be stuck with their car loans.

However, in a worrying sign of weak demand in China, Tesla appears to have rushed a small update to its Model Y that includes free ambient lighting, different wheels and faster acceleration.