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Tesla slides on widening delivery and production gap, demand worries

Economy Oct 03, 2022 06:41PM ET
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© Reuters. FILE PHOTO: The logo of car manufacturer Tesla is seen at a dealership in London, Britain, May 14, 2021. REUTERS/Matthew Childs/File Photo
 
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By Akash Sriram and Savyata Mishra

(Reuters) - Tesla (NASDAQ:TSLA) Inc shares closed down 8.6% in their steepest single-day decline in four months on Monday after third-quarter vehicle deliveries fell short of Wall Street estimates due to logistic hurdles, with slowing outlook for economic growth raising doubts about demand.

The tumble wiped out more than $71 billion in market value of the world's most valuable automaker and dragged down shares of other electric-vehicle makers.

Despite record quarterly deliveries, Tesla missed market expectations, with an unusually large gap between production and deliveries as it struggled to secure enough transportation during the peak time at a reasonable cost.

The shortfall in deliveries comes amid demand worries among investors and analysts due to increased prices of Tesla vehicles, higher borrowing cost and a dull outlook for global economic growth.

"While Tesla continues to point to supply constraints as limiting deliveries, the potential for demand destruction looms large," JP Morgan analyst Ryan Brinkman said.

Analysts warned that demand may lose steam in the coming quarters, with Toyota Motor (NYSE:TM) Corp's U.S. sales dropping 7.1%. "As far as shipping goes, we are not facing any issues," the Japanese automaker said.

Tesla will need to deliver more than 450,000 vehicles in the fourth quarter to meet its goal of growing deliveries by 50% annually. Reuters reported that it has set a target to produce about 495,000 Model Y and Model 3 in the period.

Graphic: Tesla's Q3 deliveries miss Wall Street estimates - https://graphics.reuters.com/TESLA-DELIVERIES/myvmndabxpr/chart.png

"The broader concern is more so than just them missing their deliveries, probably just more the going concern for all these smaller upstart EV... That might put us behind the curve in terms of where EV production goes," said GuideStone Capital Management's Brandon Pizzurro.

Still, analysts expect Tesla's manufacturing margins to remain robust in the fourth quarter, thanks to its pricing power and ability to use China as an export hub for many countries.

Meanwhile, rival Rivian Automotive Inc said on Monday it produced 7,363 vehicles in the third quarter, 67% higher than the preceding quarter, and maintained its full-year target of 25,000.

Tesla slides on widening delivery and production gap, demand worries
 

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Comments (4)
Brad Albright
Brad Albright Oct 04, 2022 10:20AM ET
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Successful Rich Diqk Syndrome: Having succeeded in business with the money his daddy made on the backs of others in South African diamond mines, Musk now makes the rich guy mistake of thinking he's an expert at everything. His advice is ignorant of history and morally inferior.
Maximus Maximus
Maximus Maximus Oct 04, 2022 8:39AM ET
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Musk should stick to the orderly technocrat world he knows, and stop trying to be a player in the disorderly world of politics that he clearly doesn't know at all
Ken Roth
Ken Roth Oct 04, 2022 2:53AM ET
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Musk thinks he is some kind of God when he interferes with Russias invasion of Ukraine and supports Putins fake referendum by making his own fake referendum on the internet. Most of the Ukraine people living in the east are poor living in bom..bed buildings by the russians...and musk wish to run a questionaire if you want to belong to Russia. This questionaire have already been made in January and there where 16% of the citizens living in Donbas region who wanted to join Russia. This suddenly became 99% at russian referendum....Musk should stick with his Rockets and cars and not start to suggest that crimea does not  belong to Ukranie, that would only encourage Putin to use harder means to keep Crimea when the war gets there, which it will at some point when Russia is kicked out of all the other territories.
wan ashrizah wan omar
wan ashrizah wan omar Oct 03, 2022 8:43AM ET
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can someone explain...what this humanoid Optimus can do?
Robert Kable
Robert Kable Oct 03, 2022 8:43AM ET
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Nothing that other robots haven’t been able to do for 10 years already.
animus advertere
animus advertere Oct 03, 2022 8:43AM ET
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It can crash TSLA
Matt Kay
Matt Kay Oct 03, 2022 8:43AM ET
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can wave! 10 grand please
Kris Jay
Kris Jay Oct 03, 2022 8:43AM ET
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nothing yet.  but a magician does lots of things,  patter, hand waves, wand waves to distract you from what is really happeninng, so your eyes do not focus on the reality.   In this case, "We have bad numbers and bad forecasts, demand destruction, but hey look at this, its a humanoid robot". Now i do think if anyone can do this, it is Musk but like CyberTruck these things are further in the future.  I think Tesla is a buy at a lower price (at least 220) and with a very long hold time, like 20-30 years.
 
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