ii view: Tesla deliveries fall shy of Wall Street hopes

Shares for this electric car maker have fallen in line with the S&P 500 year-to-date. We assess prospects. 

Third-quarter update to 30 September

• Deliveries of 343,830 vehicles, up from 254,695 in the previous quarter
• Total production of 365,923 vehicles, up from 258,580 in the previous quarter

ii round-up:

Electric car maker Tesla Inc (NASDAQ:TSLA) detailed quarterly deliveries comfortably above the previous quarter but below Wall Street estimates. 

Third-quarter deliveries, the nearest number Tesla offers to sales, rose to 343,830 vehicles in the three months to the end of September, up from 254,695 in the prior quarter, although shy of analyst forecasts for nearer to 365,000.

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Tesla’s share price has fallen by around a quarter year-to-date, as investors continue to fret over a global economic slowdown in the face of rising interest rates. Production in China has also been disrupted by continuing pandemic lockdowns. 

European rival Mercedes-Benz Group AG (XETRA:MBG) is down by a similar amount during 2022, while Ford Motor Co (NYSE:F) shares have fallen by almost half. The S&P 500 index is also down by around a quarter. 

Tesla production for the quarter rose to 365,923 vehicles, up from 258,580 during the second quarter when if suffered both factory shutdowns and significant supply chain challenges. 

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Tesla’s move to produce vehicles more evenly around the world given its relatively new factories in Germany and Texas, had led to an increase in cars in transit at the end of the quarter, hindering its delivery numbers. Such cars have been ordered and will be delivered to customers upon arrival at their destination.

Third-quarter results are scheduled for 19 October. 

ii view:

Founded in 2003, Tesla today makes both electric vehicles and energy generation and storage systems, along with other services including a used car business. A constituent of the S&P 500, it has a stock market value of over $800 billion compared to major German rivals Volkswagen AG (XETRA:VOW) and General Motors Co (NYSE:GM), both at under $100 billion. 

For investors, a cocktail of concerns overshadowing the economic outlook including rising interest could all hinder potential car buyers. Navigation of the pandemic, given its Chinese operations, cannot be forgotten, elevated costs such as those for raw materials and shipping also persist, while the valuation continues to ask questions. An estimated price-to-net asset value (NAV) of over 20 times compares to estimates at under two times for most of its rivals. 

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On the upside, increases in the price of its cars have helped to offset higher input costs. Robust customer demand, new production plants and hopes to eventually start selling its cyber pick-up truck - and even possibly making a driverless or robotaxi - offer future growth potential. For now, and while some caution remains sensible, long-term fans of the car maker are likely to stick with it. 

Positives: 

• Robust customer demand
• Climate change concerns are growing globally

Negatives:

• Competition from other manufacturers is increasing
• Persisting valuation concerns

The average rating of stock market analysts:

Buy