Tesla falls short of reduced sales forecasts, but analysts remain optimistic.

author: FutureCar Staff    

Sales numbers for Tesla Inc. and other electric vehicle (EV) makers failed to have a positive impact on their stocks, highlighting investors' concerns regarding production issues and profit margins. Tesla reported third-quarter deliveries that were lower than already-reduced expectations, causing the stock to initially decline by up to 3%. However, the shares later rebounded slightly, following a 4% increase over the past two days in anticipation of the data.

Delivery estimates for Tesla had been lowered in recent weeks due to a Model 3 refresh in certain regions. Despite this, Tesla still fell short of the most recent expectations that had been reduced. Citi analyst Itay Michaeli noted that the quarterly production, which was in line with forecasts, suggests limited destocking quarter-on-quarter and indicates flattish inventories. This could potentially impact sentiment about gross margins by the end of the year. Michaeli maintained Citi's neutral rating on the shares.

Tesla stated that it produced 430,488 vehicles during the third quarter and delivered 435,059 vehicles. Production increased by 17.6% from the previous year, while deliveries rose by 26.5%. However, the FactSet consensus for deliveries was 461,000, which had declined from 462,000 the previous week and from 470,000 at the end of August.

Analysts had been lowering their expectations due to concerns about slowing demand in China, as well as the Model 3 refresh and expectations of limited volume growth. Longer-than-expected factory downtime in Shanghai and Austin, Texas likely impacted Tesla's sales, causing approximately 20,000 vehicles to be shifted into the fourth quarter. Wedbush analyst Dan Ives acknowledged that Tesla missed Street estimates this quarter but remained optimistic about the fourth quarter and 2024.

On the other hand, EV startup Rivian Automotive Inc. reported its quarterly sales, surpassing Wall Street expectations by a significant margin. Unlike Tesla, Rivian's stock experienced losses initially but later started to rise. Rivian produced 16,304 vehicles and delivered 15,564 vehicles during the quarter, exceeding the FactSet consensus of 14,000 vehicles.

The narrowing gap between production and deliveries for Rivian demonstrates continued demand strength for its electric SUV R1 and electric delivery vans, according to Truist analyst Jordan Levy. Evercore ISI analysts raised their rating on Rivian stock to a buy equivalent and increased their price target on the stock to $35, projecting a 40% upside over Monday's share prices. Analysts highlighted Rivian's successful execution of cost and delivery targets, which reduces the risk of reaching break-even. They also anticipate the reveal of R2, Rivian's compact SUV, in the first half of next year, which is expected to achieve high volume and contribute to further stock growth.

In terms of stock performance, Tesla's stock has doubled this year, while Rivian's shares have gained 35% in the same period. In comparison, the S&P 500 index has advanced approximately 12% so far this year.

FutureCar Staff