Analysts react to Tesla Inc (NASDAQTSLA)’s 4Q delivery miss and the announcement of reducing prices across Tesla’s lineup.
Tesla reported 4Q deliveries around 1% below consensus including Model 3 deliveries around 3% below the street. …………
- The 4Q delivery miss is especially disappointing given the extraordinary efforts made to produce and deliver vehicles into year end.
- 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.
- 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.
- Finally some signs of cannibalization of the rather ‘mature’ Model S?
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.
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.
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................;
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).
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