Wall Street Bullish on Tesla (TSLA) Delivery Numbers

Will Tesla Inc. (TSLA) deliver? The electric car maker is slated to report its delivery numbers for this quarter next week. While it has tailwinds in the form of favorable regulation for electric vehicles (EVs) in its markets, the company has faced production challenges related to the pandemic.

In the July quarter, Tesla delivered 201,250 vehicles—the first time it surpassed 200,000 deliveries in that time period. Wall Street analysts are expecting the company to best that figure this time around. The consensus estimate for Tesla deliveries is between 220,000 and 225,000 cars.

Key Takeaways

  • Analysts are predicting a record quarter for deliveries from Tesla next week, when the car maker reports numbers.
  • The Wall Street consensus estimate is for the company to deliver between 220,000 and 225,000 cars this quarter.
  • Tesla has been beset by the same problems as other car makers during the pandemic but has been quick to recover, say analysts.

Credit Suisse's Dan Levy is an example of the consensus view. He has predicted delivery numbers of between 225,000 to 230,000 with a mid-point estimate of 228,000, writing that even reaching the mid-point estimate would be "impressive amid the chip shortage."

But some analysts, like Piper's Alexander Potter, predict that Tesla will race past that figure and reach 233,000 EVs delivered for this quarter. Potter has based his estimate on increased demand for EVs in Europe and China.

"EVs now represent 12% of trailing 3-month vehicle sales in China, followed by 10% in Europe and 3% in the United States. EV penetration has trended steadily higher in recent months, especially in Europe and China," Potter wrote in a recent report. 

According to statistics released by the China Passenger Car Association (CPCA) earlier this month, Tesla sold 44,264 units made in China to local markets and overseas in August. That figure represents a 275% year-over-year increase.

Meanwhile, GLJ Research analyst Gordon Johnson wrote that Tesla will make 223,000 deliveries. Johnson is a Tesla bear and has a $67 price target for its stock. And Morgan Stanley analyst Adam Jonas, a notable bull, settled for a delivery figure of 212,000 cars for the third quarter in a July note.

A Pandemic of Problems 

Like other automakers, Tesla has had to contend with adverse operating circumstances during the pandemic. During the company's last earnings call, CEO Elon Musk had called chip shortages "the governing factor" in Tesla's output and said that the company's growth rates would be determined by chip availability. Other supply chain kinks, such as expensive or unavailable raw materials, have also played a part in delaying production of its cars or making them more expensive for certain markets.

But the company has been quick to recover, say analysts. "Tesla appears to have been less impacted by the shortage than other (automakers)," Credit Suisse's Levy wrote, referencing the company's new microcontrollers and vehicle software as examples.

CEO Musk recently told audiences at a talk that the car industry's chip shortage problems are only "short-term" and would end by next year. "There's a lot of chip fabrication plants that are being built, and I think we will have good capacity by next year," he said.

Despite the shortages, Tesla's Shanghai plant, which also exports to Chinese-made vehicles to Europe, has also managed to maintain a steady output. On an overall basis, the Shanghai factory shipped roughly 240,000 vehicles during the first eight months of this year. Sources told Reuters that the total will inch up to 300,000 vehicles by the end of September.

Producing impressive delivery numbers, however, is no guarantee for a rise in Tesla's stock. Instead, investor expectations have varied based on estimates and Tesla's performance relative to forecasts.

For example, the company reported record deliveries in July, but the stock failed to budge. Observers opined that the company had failed to cross "a line in the sand" by reporting delivery numbers that were only slightly better than their estimates. The stock also tumbled by 7% in 2019 after the company only barely managed to beat analyst expectations.

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