Tesla Inc. is expected to announce record quarterly deliveries in early January but that may not be enough to satisfy investors as the electric-vehicle leader grapples with inflation, rising interest rates, crimped production in China and concerns about softening demand.
In an effort to clear inventory, Tesla offered a rare $7,500 discount to customers in the United States who took delivery of a new Model 3 or Model Y at the end of the year, along with 10,000 miles of free Supercharging. The Inflation Reduction Act, or IRA, will restore up to $7,500 in federal tax credits for certain EVs starting January 1.
Deliveries are one of the most closely watched metrics by investors eager to see if Tesla can maintain its rapid growth. Global fourth-quarter deliveries could reach 420,760 vehicles, according to 16 analysts surveyed by Bloomberg. That estimate, which doesn’t include some of the more recent analyst projections, exceeds the record 343,830 cars delivered in the third quarter.
Tesla is the world’s dominant seller of electric vehicles and is well positioned to take advantage of some of the IRA’s tax credits for battery cell manufacturing and locally assembled EVs. But in order to meet its goal to grow deliveries by 50 percent annually over several years—an objective Tesla warned it will fall just short of in 2022—Tesla will likely make compromises when it comes to gross margins. Tesla has cut prices across its lineup in China and scheduled down time at its plant in Shanghai.
Investors are signaling skepticism. Tesla shares plunged 65 percent in 2022, more than triple the 19 percent decline in the S&P 500 Index.
In April, CEO Elon Musk said Tesla would produce more than 1.5 million vehicles in 2022. The company made 929,910 cars through the first three quarters, so it would need to crank out more than 570,000 vehicles to meet that goal. In the third quarter, production exceeded deliveries by more than 22,000 vehicles, a gap that likely continued in the fourth quarter with cars still in transit.
Ben Kallo, an analyst at Robert W. Baird, reduced his estimates for fourth-quarter and 2023 deliveries in a note this week “to account for the reported slowdown in production and a weakening macro environment.” Kallo, who has an outperform rating on Tesla shares, expects the automaker to report deliveries of 378,262 for the quarter.
“I’m worried about the general economic environment,” said Kallo on Bloomberg Television Thursday. “Do people have the wallets to pay for $60,000 cars? That’s what the market is worried about too.”
Tesla’s Model 3 sedans and Model Y sport utility vehicles account for the vast majority of sales. The company will report the global delivery and production totals within three days of the quarter’s end.
The Austin, Texas-based company has a long history of going all-out at the end of the quarter, with Tesla employees from across the company pitching in to help hand over cars to customers. On the last earnings call, Chief Financial Officer Zachary Kirkhorn said that one-third of the quarter’s deliveries happened in the final two weeks of the third quarter.