On October 2, Tesla (TSLA.O) fell short of market expectations for third-quarter deliveries due to planned upgrades at its factories, aimed at introducing a new version of the Model 3 mass-market sedan. These upgrades necessitated production halts, resulting in a lower number of deliveries for the quarter. Nevertheless, some analysts see these upgrades as a strategic move that could potentially boost deliveries in the fourth quarter. This boost is expected to come from the introduction of refreshed models that could compete more effectively with offerings from U.S. competitors like Ford and China-based BYD.
The updated and higher-priced Model 3 compact sedan is anticipated to begin deliveries in the fourth quarter, with a planned launch event for the Cybertruck later in the year.
During the third quarter, Tesla delivered a total of 435,059 vehicles, which marked a nearly 7% decline compared to the previous quarter. However, the company has maintained its ambitious target of delivering 1.8 million vehicles by the end of the year.
An LSEG poll of eight analysts had estimated deliveries to be around 459,949 vehicles, with the lowest estimate at 442,000 and the highest at 511,405. Following the news of the delivery shortfall, Tesla’s stock briefly dropped by nearly 3% but later made a slight recovery.
In response to the challenges posed by a slowing electric vehicle (EV) market and increased competition, Tesla has been aggressively reducing prices. In the third quarter, the company cut prices of its premium Model S and Model X cars by as much as 21% in key markets like China and the United States. Additionally, it increased discounts on the Model 3 and Model Y in the United States while offering price reductions and other incentives for the Model Y in China. Some experts believe that Tesla may continue to lower prices to maintain a competitive edge.
In terms of production, Tesla manufactured 430,488 vehicles in the third quarter, down from 479,700 in the previous three-month period. Meanwhile, electric pickup manufacturer Rivian Automotive (RIVN.O) reported third-quarter deliveries that exceeded analysts’ expectations and reaffirmed its annual production goal of 52,000 vehicles.
Despite these challenges and fluctuations, Tesla remains a dominant force in the U.S. EV market for 2023. However, there is a growing demand for a broader range of EV options to meet the increasing consumer interest in electric vehicles, according to Ashwin Amberkar, an analyst at Canalys Research.
While deliveries of Tesla’s premium vehicles, Model S and Model X, increased to approximately 16,000 units in the third quarter, they still represent only about 4% of the total number of deliveries for the period.
In conclusion, Tesla faced delivery challenges in the third quarter due to factory upgrades, but its strategic moves, including price adjustments and upcoming product launches, may help it rebound in the fourth quarter and maintain its position in the competitive EV market.
