Tesla Q3 Deliveries Miss Despite China's EV Subsidy Boost

TMTPost -- Tesla Inc. posts first year-over-year (YoY) increase in quarterly deliveries this year, though still shy of the Wall Street consensus estimates.

Credit：Tesla

Tesla announced Wednesday it produced 469,796 electric vehicles (EVs) and delivered 462,890 vehicles in the third quarter of the year, representing a 9.1% YoY increase in production and a 6.4% increase in delivery. While deliveries are not defined in Tesla’s financial disclosures, they are the closest approximation to units sold reported by the company. It’s one of the most closely watched metrics on Wall Street.

The quarterly deliveries suggested Tesla achieved its first quarterly sales increase this year after two straight quarters of sales decline, but that still missed estimates. Analysts were expecting deliveries of 463,310 units in the three-month period ended September 30, and the average expectation by 12 analysts polled by LSEC was a delivery of 469,828 EVs, up 6.5% and 8% YoY, respectively.

The delivery miss means Tesla has to at least deliver 516,344 vehicles in the fourth quarter, a new quarterly record, if it wants deliveries in 2024 avoid a drop from last year that saw a record 1.81 million vehicles. That would be the company’s first yearly decrease in delivery. In the first three quarters of this year, Tesla’s sales has slumped 2.3% YoY. Wednesday's numbers make that "extremely difficult," said Sandeep Rao, a senior researcher at Leverage Shares, an investment management company with assets of about $1 billion, including in Tesla and other EV makers.

Latest quarterly deliveries showcased Tesla was weighed by the weakness in U.S. and European markets and intensified competition, especially in China, in spite of the incentive measures introduced by the Chinese government. "We believe China showed relative strength this quarter but was offset by weakness in the US and Europe," Dan Ives, an analyst at Wedbush Securities and one of Wall Street biggest Tesla bulls, said in a note.

Beijing ramped up efforts to boost the auto industry including consumption of new energy vehicles (NEVs) these months. China's Ministry of Industry and Information Technology (MIIT), in collaboration with four government bodies, has launched a nationwide campaign to bolster the new energy vehicle (NEV) uptake in China's rural areas in May.

The initiative will run from May to December 2024 and has been designed to bridge the current NEV consumption gap in rural regions, thereby enhancing residents' level of green, safe travel and contributing to the construction of beautiful villages and rural revitalization. The NEV rural promotion catalog features an impressive array of 99 models from leading auto manufacturers, encompassing a wide range of NEVs for various sectors, including sedans, SUVs and multipurpose vehicles.

The Chinese government said in August it has increased a financial stimulus to encourage consumers to scrap their old vehicles and buy new ones. Subsidies for trade-ins of new energy passenger vehicles have doubled from RMB10,000 -- a figure stipulated in an April document -- to RMB 20,000, per the circular, which was released by the Ministry of Commerce and six other government departments. Subsidies for trade-ins of fuel passenger vehicles have been raised from RMB7,000 to RMB15,000. The new policy applies to all subsidy applications submitted between April 24 this year and Jan. 10, 2025.