Tesla Earnings To Shed Light On Growth Outlook With TSLA Stock Near Lows

You’re here (TSLA) earnings on Wednesday night, as TSLA stock was weighed down by worries about demand in China, the global economy and CEO Elon Musk’s funding needs for his Twitter (TWTR) OK.


Analysts expect Tesla earnings to rise 62% to $1 a share. Revenue is expected to rise 62% to $22.3 billion.

Price increases likely played a key role in the quarter’s results. Analysts expect an average vehicle price of around $57,000, down from $49,000 in the year-ago quarter.

Third quarter shipments, announced on October 2, reached a record 343,830, but remained below estimates. However, production of almost 366,000 vehicles was largely in line. The difference reflects vehicles in transit at the end of the quarter, the company said.

Tesla production outlook

Tesla is aiming for a 50% annual increase in deliveries to 1.4 million this year. A key question is whether the company will go back on this goal or do everything possible to achieve it. On October 10, Morgan Stanley analyst Adam Jonas cut his estimate to 1.31 million units from 1.37 million. It also cut its delivery forecast for 2023 to 1.8 million from 2 million.

Tesla has increased production in Shanghai to more than 20,000 vehicles per week from 17,000 previously. At the same time, waiting lists for Tesla vehicles in China have shortened, so growth may have to rely on exports. Tesla rival BYD, meanwhile, saw an explosion in EV sales, topping 200,000 in September alone. This includes hybrids.

BYD (BYDDF), Nio (NIO) and other Chinese EV makers are increasingly competing with Tesla vehicles directly with all-new EVs.

European arrears have also decreased. So a big jump in Shanghai’s exports to Europe could be short-lived, especially with the Berlin plant slowly ramping up production.

Economic concerns are expected to continue to weigh on Tesla, with a global recession expected in 2023. It is unclear how well demand for electric vehicles can withstand the recession.

EV Incentives

Since the second quarter report, passage of the Cut Inflation Act has improved Tesla’s medium-term financial outlook. The law provides tax credits of $7,500 for qualifying electric vehicles based on where the vehicles and battery materials are produced. The credit is phased out above $300,000 of income for couples.

Incentives for U.S.-based production could amount to $3,100 per vehicle, or $2.8 billion for Tesla, based on its potential U.S. production capacity of 900,000, wrote Wells Fargo analyst Colin Langan in an Oct. 14 note. Langan raised his revenue estimates for Tesla by 33% through 2026 to reflect the Cut Inflation Act incentives.

There remains some uncertainty as to which vehicles will qualify for the new US credits.

Incentives for new commercial electric vehicles include tax credits of up to $40,000. Tesla plans to deliver its first Tesla Semi later this year, but has yet to reveal production targets for 2023. Investors will be eager to hear more about the Tesla Semi and Cybertruck plans.

Musk said the Cybertruck would be produced by mid-2023, but the next model has been repeatedly delayed.

TSLA Stock

Tesla stock rose slightly on Wednesday afternoon. The shares rose 0.4% to 220.19 on Tuesday after jumping 7% on Monday. Last Friday, TSLA stock fell to a 15-month low, falling as low as 204.16. Tesla stock is now 47% off its all-time high from early November.

Macroeconomic concerns are probably the biggest factor weighing on Tesla, but Musk’s funding Twitter (TWTR) the purchase also created some uncertainty. One analysis estimated that Musk may need to offload an additional $8 billion in TSLA stock.


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