Tesla’s quarterly deliveries miss expectations despite 6% rise

Tesla’s quarterly deliveries of vehicles fell short of expectations and dampened hopes of a robust recovery on the backs of a rebound in Chinese auto demand. In the three-month period ending September, the company sold 462,890 cars worldwide. This is an increase of 6.4% compared to a year ago. This was the first increase this year, but it fell short of Wall Street’s expectations of 463,000 vehicles. This pushed its shares down by over 6 per cent Wednesday.

Tesla has retained its top position in the electric vehicle industry. BYD, a Chinese company, reported this week that the third-quarter deliveries for EVs totaled 443,426 – a 2.7% increase from last year. BYD’s gains in battery-powered vehicles were modest, but it reported an increase of 75.6% in sales of plug in hybrids since May when the company unveiled its latest hybrid technologies.

Globally, EV sales have slowed, but in China, which is the largest auto market in the world, prospects are better after Beijing doubled in July the subsidies it offered to customers who switched from a gasoline vehicle to an EV, or a plug in hybrid.

Tesla didn’t provide a breakdown of its geographical deliveries. However, industry data and analysts forecasts indicate that sales in Europe were low while deliveries in China increased by nearly 25% compared to the prior quarter.

Analysts have reported that in recent weeks there has been a growing optimism among investors about the Austin-based firm’s ability to exceed market expectations due to a surge in Chinese demand.

The Chinese competitors’ plug-in hybrids and cheaper EVs have forced Tesla to slash the prices of some of their models, including the lease price. Mercedes-Benz, Porsche and other luxury car manufacturers have recently announced lower profits than expected due to the slowdown in consumer spending in China.

Dan Levy, an analyst at Barclays, said in a report that Tesla’s failure to meet its delivery targets was due in part to the weakness of its high-end Model S and X models. Cybertruck, a off-roader launched last year that has been plagued by manufacturing problems and part recalls due to faulty parts, also affected numbers.

Tesla was also preparing to reveal its first “robotaxis”, or a fleet self-driving cars, next week. Elon Musk called it “an event for the history books”.

Musk made a radical pivot in his strategic approach towards autonomous driving, robotics and artificial intelligence. He told investors that these technologies will be Tesla’s primary revenue sources, and would drive its valuation up.

There are questions about how and when the company plans to monetise their autonomous taxis. This is due to the uncertainty surrounding the technology, the insurance coverage, the vehicle costs, as well as regulatory requirements.

Tom Narayan is an analyst with RBC Capital Markets. He said that the focus now was on the new opportunities Tesla has from its “robotaxi” software and full-self-driving, also known as FSD.

Narayan stated that “robotaxis will not be ubiquitous for many years, or even decades.” “But it’s exciting because. . . When it occurs, the auto industry could grow dramatically.