Tesla is slated to announce record deliveries for the Q2, probably over the weekend. Wall Street predicts Tesla deliveries growing 74% to 445,000, according to FactSet. Meanwhile, Tesla stock has been downgraded four times ahead of the release, with analysts expecting vehicle price to continue weighing on gross margins.
Tesla Inc. (TSLA.O) is expected to end its nearly two-year long run of record quarterly deliveries due to China’s prolonged zero COVID shutdown, hitting its production and supply chain.
This would be down from Tesla’s record deliveries of 310,048 the preceding quarter, marking Tesla’s first quarter-on-quarter decline in deliveries since the first quarter of 2020.
Tesla, has posted record deliveries every quarter since the third quarter of 2020, weathering pandemic and supply-chain disruptions better than most automakers.
Tesla Q2 sales forecasts
The firm revised its estimates for Q2 deliveries to 448,000 units, above analyst consensus. Deutsche Bank predicts Q2 deliveries about 168,000 vehicles in North America, Q2 deliveries of 153,000 in China, Q2 deliveries of 87,000 in Europe and Q2 deliveries of 23,000 in the rest of the world.
Meanwhile, Guggenheim also raised the firm’s price target on Tesla stock Monday to 112, up from 105, keeping a sell rating. Guggenheim forecasts 446,000 units delivered in Q2. The firm’s view is that Q2 vehicle incentives and price reduction could boost sales.
The two Tesla stock price hikes come as the global EV giant has been handed four downgrades, including revisions from Goldman Sachs and Morgan Stanley, over the last six days.
Cowen analyst Jeffrey Osborne said in a report, “investors are growing fatigued with Elon’s rants” on the Twitter saga, politics and other topics. “Many we speak to are questioning if we have reached ‘peak Elon.'”
Tesla moving inventory
Tesla has been working to move inventory before the Q2, offering discounts and clearance deals running through the end of June.
Tesla has begun offering Q2 price reductions to customers who order a Model 3 from June 14 to June 30, a three months of unlimited free supercharging, according to the company’s website.
In China, Tesla once again is offering insurance subsidies on Model 3 vehicles. Costumers in China who buy and complete delivery of an inventory Model 3 rear-wheel drive vehicle before the end of June will be eligible for an insurance subsidy of about $1,120, according to CnEVPost.
Tesla also got all Model 3 vehicle trims eligible for the full $7,500 tax credit under the Inflation Reduction Act (IRA) in early June. Tesla’s Model 3 and Model Y vehicles all qualify for the $7,500 tax credit.
Tesla went further by cutting price of inventory Model S and Model X cars by a whopping $7,500.
Analysts predict Tesla deliveries in 2023 to come in around 1.82 million, up from 1.313 million in 2022.
Tesla market position
Tesla shares are up 96% in 2023 and 137% from their Jan. 6 low. However, Tesla is down substantially from the all-time high 414.50 it hit in November 2021.
On Monday, Deutsche Bank raised its TSLA stock price target to 230 from 200, and maintained a buy rating on the shares.
Tesla stock tumbled 6.1% to 241.05 during Monday’s market trade, moving toward the 21-day line in above average volume. On Friday, shares dipped 3% to 256.60. Last week, TSLA fell 1.5%. Shares are up around 20% in June.
Analysts continue to worry about price cuts weighing on gross margins, and TSLA valuation.
Profit margins for the global EV giant also fell below 20% as the company executed an aggressive price slashing strategy in the first part of 2023. Tesla reported revenue increasing 24% to $23.33 billion with earnings of 85 cents a share, a 20% decline compared with 2022.
