Tesla (TSLA) on Sunday reported record third-quarter vehicle deliveries, but they came in well below expectations. The report could add to demand concerns, particularly in China as Elon Musk’s EV giant ramps up its manufacturing capacity.
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Tesla stock fell solidly Monday morning after breaching short-term lows on Friday.
Tesla delivered 343,830 electric vehicles in the third quarter, up 42% year over year and beating the record 310,048 in the first quarter. It was also 35% higher than the 254,695 in the second quarter. The Shanghai plant faced a prolonged shutdown and slow recovery in the second quarter due to Covid lockdowns.
However, analysts had expected Tesla deliveries of 350,000 to 370,000 with the consensus reading just above 360,000.
Given Tesla’s large additions over the past six months, the increase is relatively modest. Tesla Berlin opened in March and the Austin plant in April, although these locations are still slowly ramping up. The Shanghai site received a major capacity expansion in July and early August, with these measures temporarily curbing production.
In fact, Tesla production significantly exceeded deliveries in the third quarter, with the electric giant producing 365,923 vehicles last month.
Tesla delivered 325,158 Model 3 and Model Y vehicles and 18,672 Model S and Model X luxury electric vehicles in the third quarter.
In its press release, Tesla cited logistical challenges and an increased number of vehicles in transit.
Concerns about demand for Tesla in China
There are indications that Tesla demand is not strong enough to service the increased capacity, particularly in China.
However, Portal reported last week that Tesla plans to keep production at the upgraded Shanghai plant at about 93% of capacity by the end of the year. Recent improvements to the plant increased production capacity by almost a third.
Tesla China’s waiting times for new vehicles fell sharply in September, indicating little or no lag. Wait times have increased slightly again as Tesla switches back to exporting vehicles from Shanghai earlier in the quarter.
Tesla last month began offering a new insurance subsidy in China that served as a de facto price cut. This insurance subsidy now runs until the end of the year.
There is speculation that Tesla will announce a full price cut in China in early October. Another option for Tesla is to export even more of its production in Shanghai. There are some reports that this is already happening as Shanghai switched to export a few days earlier. That could be why Tesla has more vehicles in transit.
But the backlog is also starting to narrow in Europe, as Tesla recently introduced a shorter-range Model Y there, often at a much lower price than the previous base model. The Berlin plant should also slowly account for a larger share of Tesla’s European sales.
Add to print: BYD (BYDDF) and no (NIO) have just unveiled rivals to the Model 3, with the Model Y likely to face growing competition next year.
Tesla electric vehicles
Tesla produces the Model S luxury sedan and Model X SUV, as well as the Model 3 sedan and Model Y crossover. However, the vast majority are the Model 3 and Model Y models.
Other vehicles, including the Semi and Cybertruck, have been pushed back multiple times. Musk has said the Cybertruck is on track for mid-2023 and that the Tesla Semi will begin deliveries in late 2022.
The Q3 Tesla deliveries followed Tesla’s AI Day on Friday, where the company showcased its latest humanoid robot prototype, the Optimus, as well as AI advances in driver-assistance software. Musk tweeted that the event is primarily a pitch to recruit AI and robotics engineers.
Tesla stock
Tesla shares fell more than 5% ahead of Monday’s open for trading. That would be the lowest value since the end of July. Shares fell 1.1% to 265.25 on Friday, beating recent lows. Shares retreated from the 50-day moving average over the week.
Tesla shares are in a long consolidation with a buy point of 402.73, according to MarketSmith. Investors might view the pattern as a long double bottom basis offering entry from 384.35. However, the TSLA stock chart is in flux.
But there is also a smaller base within the broad and loose action of the past year. TSLA stock, now looking like a small double bottom pattern, has an entry of 313.90.
Tesla has a composite rating of 83. It has a relative strength rating of 78, an IBD exclusive Stock Checkup gauge of stock price movements with a score from 1 to 99. The rating shows how a stock’s performance has been over the past 52 weeks compared to all other stocks claimed in the IBD database. The EPS rating is 77.
Battle of the Titans: Tesla vs. BYD
Tesla rivals in China
Musk and Tesla also face new competition in China’s electric vehicle market from BYD, Nio, Li car (LI) and XPeng (XPEV). Nio, Li Auto and Xpeng reported September shipments on Saturday, with BYD sales also due in early October.
NIO and BYD target Europe to challenge Tesla
BYD, the world’s largest maker of electric vehicles and plug-in hybrids and China’s largest supplier of pure electric vehicles, takes on Tesla’s Model 3 head-on for the first time. The BYD Seal, with similar specs but $10,000 less than a Model 3, started shipping in late August.
Luxury EV startup Nio began shipping the ET5, a rival of the Model 3, on September 30.
BYD and Nio also want to enter the European market after starting sales in Norway in 2021. BYD showcased three all-electric models for Europe at a virtual event on September 28, and Nio is scheduled for a similar event in October. 7. BYD recently started shipments in Australia, India and several other Asian countries, and will roll out in several other markets over the next few months.
Please follow Kit Norton on Twitter @KitNorton for more coverage.
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