By Michael Elkins
UBS reiterated a Buy rating and $367.00 price target on Tesla Inc (NASDAQ:TSLA) following the company’s Q3 delivery report. The electric vehicle company delivered 343,830 vehicles in the 3rd quarter, a miss compared to the consensus estimate of 364k. However, production was in line with estimates at 365,923 units produced.
Tesla said in the release that “as our production volumes continue to grow, it is becoming increasingly challenging to secure vehicle transportation capacity and at a reasonable cost during these peak logistics weeks. In Q3, we began transitioning to a more even regional mix of vehicle builds each week, which led to an increase in cars in transit at the end of the quarter. These cars have been ordered and will be delivered to customers upon arrival at their destination.”
UBS believes that the company is best positioned for a more balanced market and expects some tactical price action to ensure that its growing capacity will be fully utilized.
UBS wrote in a note that, “With ~30% auto gross margin, we think Tesla is better positioned than anyone else to adjust pricing downwards if needed while defending strong margins and generating further economies of scale. For Q3, the ~20k shortfall in deliveries could imply that Tesla remains below the 30% auto gross margin (ex credits) level that we would have expected on our higher delivery estimate.”
Tesla unveiled a prototype of its humanoid robot at the company’s AI Day this past Friday. The robot walked around on stage, waving to the crows of people. Footage was shown of the robot performing simple tasks in a factory workshop. The final design version was also shown, but it wasn’t fully functional yet. Elon Musk expects the robot to become available in a few years’ time for a price tag below $20,000.
The company also featured its Full Self-Driving (FSD) program at the event. Tesla now has 160,000 users participating in the FSD Beta program and expects a roll-out to all FSD buyers / subscribers by the end of this year. Management cautioned that regulation in the different markets will ultimately set the framework for what is possible.
Shares of TSLA are up 3.10% in pre-market trading on Tuesday.
Find more Tesla production stats here.