Tesla Q3 Deliveries Expected to Surge

By Akash Sriram and Abhirup Roy

(Reuters) – Tesla (NASDAQ:TSLA) is anticipated to show an 8% increase in electric vehicle deliveries for the third quarter, according to Wall Street estimates. This growth is attributed to extended incentives and attractive financing options in China, the world’s largest auto market.

In response to declining spending in China due to economic challenges and increasing competition from local automakers like BYD (SZ:002594), Tesla has rolled out various offers during the spring. These include insurance deals, discounts on select paint options, and zero-interest loans lasting up to five years.

These initiatives have effectively boosted sales in July and August, as indicated by data from the China Passenger Car Association (CPCA), after two consecutive quarters of declining deliveries.

Analysts confirm this upward trend, forecasting that Tesla will deliver 469,828 vehicles, marking the company’s best third quarter to date, a rise from approximately 435,000 vehicles in the previous year.

Scott Acheychek, COO of REX Financial, notes, “China, which accounts for one-third of Tesla’s sales, is a major growth driver.”

Deutsche Bank analysts predict that Tesla will deliver approximately:
– 139,000 Model 3 sedans
– 296,400 Model Y SUVs
– A combined 13,350 Model S and Model X vehicles
– About 13,500 Cybertruck pickups during the third quarter.

Sales in China have also received a boost from government subsidies encouraging the transition from gasoline vehicles to electric ones. Additionally, Tesla’s vehicles, especially the Model Y SUV, are now eligible for government purchases for official use.

Ken Mahoney, CEO of Mahoney Asset Management, states that the sales boost from China, coupled with the benefits from a recent U.S. Federal Reserve interest rate cut, may enable Tesla to reach its record goal of 1.8 million vehicle deliveries in 2023.

Elon Musk has previously indicated that Tesla is on track for increased deliveries in 2024. The company began Cybertruck deliveries late last year, planning to ramp up production to 250,000 units next year, although official numbers for production and deliveries remain unreleased.

With demand for electric vehicles slowing in the U.S. and subsidies lacking in Europe, Tesla delivered around 831,000 vehicles in the first half of this year. To avoid a drop in deliveries for 2024, achieving approximately 979,000 in the second half is crucial.

This performance will help ease investor concerns about future electric vehicle demand, especially as attention shifts to Tesla’s upcoming robotaxi product unveiling on Oct. 10. This marks a significant shift in the company’s strategy, abandoning its affordable car project, which some analysts believe could unlock trillions of dollars in value for Tesla.