Tesla (TSLA) – Deliveries & Mass Market Cars – April 06, 2024
Deliveries
Tesla missed Q1 delivery estimates by 14%, despite these estimates sharply dropping in the weeks leading up to the report. Some argue that Musk’s polarizing presence is the cause of the weakness. He’s certainly polarizing, but I really don’t think that’s a relevant source for this. Tesla’s pain is most likely being driven by a historic rate hike cycle that is weighing on car affordability and demand. Some current Electric Vehicle (EV) market saturation may or may not also be contributing. That potential saturation certainly wouldn’t be permanent as it’s quite clear that EVs will continue to take more market share. The budding sector likely just needs a lot more charging stations (we’ve all seen the videos of long charging lines), actual participation from more competitors and continued battery/range upgrades. Finally, some temporary factory closures and maintenance are adding to temporary Tesla headwinds, while material pressure on its 2024 growth and margins is hurting sentiment.
This is a cyclical business. Tesla is a structural market share taker in electric vehicles, which will buffer some of the pain from the cyclicality. Still, auto sales have always been cyclical. Tesla’s results will likely sharply improve when we enter a more fun part of this current cycle for the sector. That will not happen in Q1, but the idea that the fundamental cause here is Musk making headlines (like he always does) is something that I find erroneous.
Mass Market Cars & Robotaxi
On Friday, Reuters reported that Tesla was scrapping its affordable car plans to focus on Robotaxis. Considering the affordable car was baked into multi-year earnings growth estimates for analysts, this led to some concern. Elon called the news inaccurate, which should have shareholders breathing a sigh of relief. This project is an important one for the company, in my opinion.
Tesla will unveil its latest Robotaxi innovation later this year. It’s still likely several years away from commercial viability.
Elon… but make it more cowboy.
