Tesla's third-quarter deliveries are expected to exceed initial expectations, spurred by enhanced incentives in China that have significantly bolstered sales, according to Tudor Pickering Holt's report. The brokerage anticipates deliveries of 475,000 units, surpassing the consensus estimate of 461,000 units.
At the market close on Monday, Tesla's shares experienced a notable increase of 4.9%. In detail, TPH is projecting China deliveries to reach 178,000 units for Q3, a substantial rise from the 146,000 units recorded in the previous quarter. This growth can be attributed to Tesla's appealing 'zero percent interest offerings' which have effectively stimulated demand, as highlighted by analyst Matt Portillo.
Although European sales are expected to exhibit a slight decline from the previous quarter, landing around 76,000 units due to overall subdued demand for electric vehicles, the Model 3 and Model Y sales in the US and Canada are predicted to remain relatively stable, according to TPH’s insights. Sales of the much-anticipated Cybertruck are forecasted at 18,000 units for the third quarter, which Portillo describes as 'relatively muted.' Portillo expressed optimism about the overall performance of deliveries, stating, 'It should be a good quarter for deliveries, as we would expect consensus estimates to drift higher in the coming weeks.' Nonetheless, investor attention will be keenly directed towards the implications of Tesla ramping up incentives on automotive gross margins.
TPH predicts a slight decline in these margins, excluding regulatory credits, anticipating a figure of 14.1% in the third quarter. Furthermore, the firm reaffirmed an earnings per share target of $0.67, which notably exceeds the consensus estimate of $0.61. The earnings per share is expected to be fortified by an increase in deliveries alongside 'another robust quarter of contribution from the energy storage segment,' as detailed by Portillo. Price: 249.75, Change: -0.25, Percent Change: -0.10.