Tesla Misses On 4Q Deliveries, Discounted Pricing: Analysts React

Analysts react to Tesla Inc (NASDAQTSLA)’s 4Q delivery miss and  the announcement of reducing prices across Tesla’s lineup.

4Q Deliveries

Image source: Tesla

Morgan Stanley:

Tesla reported 4Q deliveries around 1% below consensus including Model 3 deliveries around 3% below the street. …………

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Q3 hedge fund letters, conference, scoops etc

Key thoughts:

  1. The 4Q delivery miss is especially disappointing given the extraordinary efforts made to produce and deliver vehicles into year end.
  2. Likely some pull-forward of volume from 2019 into 2018 due to the urgency to purchase ahead of the tax credit expiry, although we cannot quantify this figure.
  3. The announced price cut is probably a bigger negative than the delivery miss. A $2k cut represents roughly a 4% discount on an average Model 3.
  4. Finally some signs of cannibalization of the rather ‘mature’ Model S?

Nomura:

4Q 18E deliveries are likely to be as good as it gets for the next 1-2 quarters due to an in-transit lag with Europe, U.S. federal tax credit phase-out, lower U.S. Model 3 backlog and macroeconomic weakness.

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We believe the majority of the remaining backlog is waiting for a low-range SKU ($35,000). In addition, the federal tax credit halved for all of Tesla’s U.S. vehicle sales on Jan 1st, and historical precedent suggests this will result in at least a short-term headwind to regional demand.

 

BAML:

4Q deliveries in line with consensus, below BofAML - Earlier this morning, TSLA announced 4Q deliveries of 90,700 vehicles, which came in roughly in line with consensus of ~91,000, but below our estimate of ~101,000. Relative to our estimates, TSLA delivered 13,500 Model S vehicles (BofAMLe 16,018), down roughly 12% YoY and 7% sequentially, and 14,050 Model X (BofAMLe 13,499), up about 7% YoY and 7% sequentially. Model 3 deliveries of 63,150 came in below our 71,500 estimate (up 13% from 3Q), but were roughly in line consensus of ~63,000................;

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Burgeoning demand issue and ~$1bn profit headwind - In addition to the deliveries announcement this morning, TSLA announced that it will be reducing prices across its lineup in the US (Model S, X, and 3) by $2,000 per unit to partially absorb the reduction of the federal electric vehicle tax credit on its vehicles for consumers (dropped from $7,500 to $3,750 on January 1, 2019 in conjunction with the program phase-out after TSLA reached 200k cumulative units sold).

What do you think about Tesla 4Q deliveries - good or bad? Comment below!



About the Author

Jacob Wolinsky
Jacob Wolinsky is the founder of ValueWalk.com, a popular value investing and hedge fund focused investment website. Prior to ValueWalk, Jacob was VP of Business Development at SumZero. Prior to SumZero, Jacob worked as an equity analyst first at a micro-cap focused private equity firm, followed by a stint at a smid cap focused research shop. Jacob lives with his wife and four kids in Passaic NJ. - Email: jacob(at)valuewalk.com - Twitter username: JacobWolinsky - Full Disclosure: I do not purchase any equities anymore to avoid even the appearance of a conflict of interest and because at times I may receive grey areas of insider information. I have a few existing holdings from years ago, but I have sold off most of the equities and now only purchase mutual funds and some ETFs. I also own a few grams of Gold and Silver