Tesla Deliveries Miss Estimates As Company Blames Logistical Issues And Softening Demand

Summary

• Rare for Tesla to deliver less than it produces
• Tesla shares underperformed in 2022 since going public
• Gap between output and deliveries continues to increase

Tesla Inc (TSLA.O) said quarterly deliveries missed market estimates on Monday, held back by growing demand concerns and ongoing logistical issues that capped a tumultuous 2022 for the Elon Musk-led firm.

The firm is still the world’s most valuable automaker even after shedding 65% of its market value last year. Shares tumbled 8.5% to $112 on Tuesday.

Tesla handed over 405,278 vehicles to customers in the fourth quarter ended Dec. 31, falling short of analysts’ estimates of 431,117, according to Refinitiv. For all of last year, the electric-vehicle maker’s deliveries surged by 40%, missing Musk’s 50% annual target.

“We believe Tesla is facing a significant demand problem … many investors underestimate the magnitude of the demand challenges Tesla is facing,” Bernstein analyst Toni Sacconaghi said.

The shortfall also underscored the logistics hurdles facing a company renowned for its end-of-quarter delivery rush, with the gap between output and deliveries widening to 34,000 vehicles as more cars got stuck during transport.

Tesla also intends to run a reduced production schedule in January at its Shanghai plant, extending the reduced output it started in December into 2023, Reuters has reported.

Tesla has tried to shore up demand with a rare set of discounts on its best-selling vehicles as competition intensifies from established automakers such as Ford Motor Co (F.N) and General Motors Co (GM.N) and startups such as Lucid Group Inc (LCID.O) and Rivian Automotive Inc (RIVN.O).

“Tesla’s previous gains have been based on delivering super-charged growth. Without that it looks (like) a different proposition,” said Russ Mould, investment director at AJ Bell.

Sacconaghi said demand challenges will continue into 2023 as most Tesla models are not eligible for a tax rebate and the company would need to either lower its growth targets or reduce prices.

The company, which has some of the biggest margins in the industry, will post quarterly results on Jan. 25.

The fourth-quarter deliveries comprised 388,131 Model Y sports utility vehicles (SUVs) and Model 3 compact sedans, compared with 17,147 Model S and Model X luxury cars.

Production stood at 439,701 vehicles.

Tesla said in a separate statement on Monday it plans to hold its Investor Day on March 1 and will probably discuss long-term plans for capital allocation and expansion at the event that will be hosted at its Texas Gigafactory.

The automaker also suggested a “generation 3” platform that could be demonstrated to investors at the event. Musk said in October that Tesla was working on a “next-generation vehicle” that will be less costly and smaller compared to the Model Y and Model 3 cars.