Tesla (TSLA) is expected to report another weak sales quarter. It doesn't have many excuses to explain this situation. #2024MacroOutlook#
Analysts expect the automaker to report that it delivered 441,019 electric cars in the second quarter, down 5.4% from a year ago on Tuesday, July 2. This will be the second consecutive quarter of decline. Tesla last experienced this when it phased out its first model, the Roadster, in 2012.
(Image source: Bloomberg)
Tesla has solved several problems that caused its difficulties earlier this year, including a suspected arson attack on its factory near Berlin and the transfer of transportation related to the Red Sea conflict. Except for a relatively simple problem, there are few excuses for the slowdown in sales of Tesla's old models when competing with new electric vehicles from competitors.
"In the face of increasing competition and the current product line with slightly old models, achieving growth has become more difficult," said Tom Narayan, a market analyst at RBC Asset Management. He gave the equivalent recommendation of "buy" rating on Tesla's stock.
CEO Elon Musk has tried various methods to stimulate demand for Tesla vehicles, including large discounts and low-price lease deals. But these discounts did not prevent sales from declining before the company's sales slowed down in the second half of last year, and sales fell further as the entire electric vehicle market cooled down.
Musk also announced massive layoffs in April, affecting over 10% of Tesla's workforce, including sales personnel. This could help the company save cash, but it could also affect the delivery numbers for the second quarter.
For novices of electric vehicles, there are many questions about battery life, charging stations, and software features. Nevertheless, Musk is increasingly inclined to most online sales processes and encourages consumers to order Teslas without visiting stores.
Tesla has difficulty further developing on the basis of the success of the Model Y, which was the world's best-selling model last year. Since this sport utility vehicle was launched in 2020, and the Model 3 sedan is three years older than it.
The company's first pickup truck - Cybertruck, inspired by the "Blade Runner", started slowly since the end of last year. Tesla has repeatedly recalled this truck, including recalls of acceleration pedals and wipers.
Investors were not concerned about the actions of many analysts who lowered their expectations for Tesla vehicle deliveries in recent weeks. Although the stock price has fallen 20% this year, Musk has boosted the stock with a promise to launch a new model by the end of the year. He also highly praised the company's humanoid robots and the planned launch of dedicated robot taxis in August.
(Image source: finance.yahoo)
Last month, shareholders voted to approve CEO Elon Musk's $56 billion compensation package, a significant vote of confidence in him.
"We see more and more investors turning their attention to the robot taxi event on August 8," wrote Ben Kallo, an analyst at Robert W. Baird, in a report last week. "We believe that the delivery of the second quarter is particularly important for the annual figures and whether 2024 will be a year of growth, but we expect the focus to remain on long-term prospects until the curtain is unveiled on the robot taxi."
Kallo expects Tesla to deliver 435,200 vehicles this quarter and about 1.83 million vehicles for the whole year, only slightly higher than its total for 2023. Although the company promised to launch new models early next year in April, it did not provide any details on these models and reiterated that growth in 2024 will be "significantly lower".