Interactive Investor

ii view: Tesla deliveries beat Wall Street forecasts

Growing annual production and deliveries, and now offering its recently launched Cybertruck. Buy, sell, or hold?

3rd January 2024 11:25

Keith Bowman from interactive investor

Fourth-quarter production update

  • Total production of 494,898 vehicles, up from 430,488 in the previous quarter
  • Deliveries of 484,507 vehicles, up from 435,059 in the previous quarter
  • Full-year production of 1,845,985 vehicles, up 35% from full year 2022
  • Full-year deliveries of 1,808,581 vehicles, up 38% from full year 2022

ii round-up:

Car maker Tesla Inc (NASDAQ:TSLA) has detailed quarterly vehicle deliveries, the nearest number it gives to sales, which marginally beat Wall Street forecasts. 

Fourth-quarter deliveries of 484,507 vehicles rose from 435,059 in the previous quarter, surpassing analyst estimates for around 477,000. That gives total deliveries for the full year 2023 of 1.8 million, up 38% from 2022 but down on annual growth of 40% the year before.

Shares in the Nasdaq 100 company proved little changed in trading following this latest news, having doubled during 2023. Ferrari NV (MTA:RACE) and Aston Martin Lagonda Global Holdings Ordinary Shares (LSE:AML) gained 58% and 46% in 2023, while European mammoth Volkswagen AG (XETRA:VOW) fell by a fifth. The Nasdaq 100 itself rose 54% last year.

Tesla’s production for the year rose 35% from 2022 to 1,845,985 vehicles, with the Elon Musk headed company producing from two factories in the US, along with one in China and one in Germany. It is also planning to build a factory in lower cost Mexico.

These latest figures excluded any details in relation to its recently launched Cybertruck. Delivery targets for 2024 are expected to be outlined at fourth-quarter results on 24 January.  

ii view:

Employing over 120,000 people, Tesla makes both electric vehicles (EVs) and energy generation and storage systems. Its stock market value of more than $750 billion compares to rivals such as Ford Motor Co (NYSE:F), General Motors Co (NYSE:GM), and Rivian Automotive Inc Class A (NASDAQ:RIVN), each with stock market valuations of under $55 billion. Chief executive Elon Musk previously added to his interests with the acquisition of social media company Twitter, now rebranded ‘X’, a platform he believes can assist with marketing for Tesla.  

For investors, rivals such as Bayerische Motoren Werke AG (XETRA:BMW) and Mercedes-Benz Group AG (XETRA:MBG) are also now focused on producing and selling electric and hybrid vehicles. Elevated borrowing costs to finance a vehicle purchase should not be forgotten. Costs generally for businesses remain elevated, the full environmental impact of battery production remains open to debate, while Tesla’s estimated price to Net Asset Value (NAV) of over 15 times contrasts with estimates at under two times for many of its competitors, suggesting the shares are not cheap.

More favourably, climate change concerns persist, and development of its vehicle software and network of supercharging stations continues. The geographical spread of its factories including its relatively new German plant has reduced shipping costs, Tesla's high-tech Cybertruck has now been launched in the US, while sales for its energy generation and storage business also bring added potential.  

In all, and despite ongoing risks, existing long-term holders of this innovative EV-maker are likely to stay onboard for the ride, while new investors will be attracted to its growth potential.  

Positives: 

  • Climate change concerns remain
  • Expanding network of super fast charging stations

Negatives:

  • Rising competition from other manufacturers
  • Elevated costs

The average rating of stock market analysts:

Hold

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