Tesla reported record third-quarter vehicle deliveries on Sunday, but they came in well below views. The report on Tesla deliveries may reinforce demand concerns, especially in China, as Elon Musk's EV giant ramps up production capacity.
Tesla stock fell solidly Monday after undercutting short-term lows Friday.
Tesla deliveries totaled 343,830 EVs in the third quarter, up 42% vs. a year earlier and topping Q1's record 310,048. It was also 35% higher than Q2's 254,695. The Shanghai plant faced a lengthy shutdown and slow recovery in Q2 due to Covid lockdowns.
But analysts had expected Tesla deliveries of 350,000-370,000, with the consensus slightly above 360,000.
Given the big Tesla expansions over the last six months, the increase is relatively modest. Tesla Berlin opened in March and the Austin plant in April, though those sites are still slowly ramping up. The Shanghai site got a big capacity upgrade in July and early August, with that effort temporarily limiting output.
Indeed, Tesla production significantly exceeded deliveries in Q3, with the EV giant churning out 365,923 vehicles last month.
Tesla delivered 325,158 Model 3 and Model Y vehicles in Q3, along with 18,672 Model S and Model X luxury EVs.
In its press release, Tesla cited logistical challenges and an increased number of vehicles in transit.
Wedbush analyst Daniel Ives wrote in a note Monday that while Tesla "clearly" had some delivery challenges in the quarter concerns about demand issues.
Tesla Deliveries: China Demand Concerns
There have been recent indications that Tesla demand may not be not strong enough to meet the increased capacity, especially in China.
Reuters reported last week that Tesla plans to keep production at the upgraded Shanghai plant at around 93% of capacity through the end of year. The recent improvements to the plant increased production capacity by almost a third.
Tesla China wait times for new vehicles also came down sharply in September, signaling little or no backlog. Wait times have increased modestly again, as Tesla shifts back to exporting Shanghai vehicles at the start of the quarter.
Tesla began offering a new insurance subsidy in China last month, serving as a de facto price cut. That insurance subsidy will now run through year-end.
There is speculation that Tesla will announce an outright China price reduction in early October. Another option is for Tesla to export an even-greater share of its Shanghai output. There are some reports that this is already happening, with Shanghai shifting to export a few days earlier. That could be why Tesla has more vehicles in transit.
European backlogs are also starting to come down. Tesla recently introduced a shorter-range Model Y, often at a much-lower price than the prior base model, to the European market. Also, the Berlin plant should slowly account for a greater share of Tesla sales in Europe.
Adding to the pressure on Tesla deliveries: BYD and Nio have just introduced Model 3 rivals, with the Model Y likely to face growing competition over the next year.
Tesla Deliveries: The EV Lineup
Tesla produces the luxury Model S sedan and Model X SUV as well as the Model 3 sedan and Model Y crossover. However, the vast majority are the Model 3 and Model Y models.
Other vehicles, including the Semi and Cybertruck have been pushed back multiple times. Musk has said the Cybertruck is on track for mid-2023 and that the Tesla Semi will begin deliveries by the end of 2022.
The Q3 Tesla deliveries came on the heels of Tesla's AI Day on Friday, in which the company showcased its latest Optimus humanoid robot prototype, as well as AI advances in driver-assist software. Musk tweeted that the event was primarily a pitch to recruit AI and robotics engineers.
Despite deliveries missing views, Truist analyst William Stein raised TSLA price target to $348 up from $333. Stein wrote in a note Monday that the company's chances of success with its AI efforts "significantly overwhelms" his near-term model revision in terms of a price target.
Tesla Stock
Tesla stock fell 8.6% to 242.40 during Monday's market trading. Shares are at their lowest since late July. The stock fell 1.1% to 265.25 on Friday, undercutting recent lows. TSLA fell back from the 50-day moving average during the week.
Tesla stock are in a long consolidation with a 402.73 buy point, according to MarketSmith. Investors could view the pattern as a long double-bottom base, offering a 384.35 entry. However, TSLA stock's chart is in flux.
There's also a smaller base within the wide and loose action of the past year. Now looking like a small double-bottom pattern, TSLA stock has a 313.90 entry.
Tesla has a Composite Rating of 83. It has a 78 Relative Strength Rating, an exclusive IBD Stock Checkup gauge for share price movement with a 1 to 99 score. The rating shows how a stock's performance over the last 52 weeks holds up against all the other stocks in IBD's database. The EPS rating is 77.
Clash Of The Titans: Tesla Vs. BYD
Tesla China Rivals
Musk and Tesla are facing new competition in the China EV marketplace from BYD, Nio, Li Auto, and XPeng. Nio, Li Auto and Xpeng reported September deliveries on Saturday, with BYD following early Monday.
NIO And BYD Target Europe In Challenge To Tesla
BYD reported September sales topped 200,000 in September. In the third quarter, BYD sold 538,704 NEVs, up 194% vs. a year earlier and surging from 355,021 in Q2. NEVs include all-electric vehicles, plug-in hybrids and hydrogen fuel-cell vehicles. These numbers easily topped Tesla deliveries in Q3, while BYD is gaining ground on its U.S. rival in pure electrics.
BYD, the world's largest maker of EV and plug-in hybrids and China's largest seller of pure electrics, is taking on Tesla's Model 3 directly for the first time. The BYD Seal, with similar specs but $10,000 less than a Model 3, kicked off deliveries in late August. It is estimated that Seal deliveries should top 1.5 million in 2022. The company is targeting 4 million in 2023.
Luxury EV startup Nio began deliveries of the ET5, a Model 3 rival on Sept. 30.
BYD and Nio are also looking to solidify footing in the European market, after starting sales in Norway in 2021. BYD presented three all-electric models for Europe at a virtual event on Sept. 28, and Nio is set for a similar event Oct. 7. BYD recently began deliveries in Australia, India and several other Asian nations, launching in several other markets in the next few months.
Please follow Kit Norton on Twitter @KitNorton for more coverage.
