Source: Wall Street View, author: Zhao Yuhe.

$Tesla (TSLA.US)$Tesla will announce its second-quarter deliveries on Tuesday. Currently, most Wall Street analysts predict that Tesla's deliveries in the second quarter will decline for the second consecutive quarter. The last time this happened was when the company was gradually phasing out its first model, Roadster, in 2012. However, Tesla's stock price rose nearly 8% on Monday, driven by the increase in stock prices of Li Auto Inc. and NIO Inc.

Old model and cooling market led to the decline in deliveries.

According to analysts' expectations, Tesla is expected to announce Q2 deliveries of 441,019 vehicles on Tuesday, a 5.4% decline from the same period last year. This will be the second consecutive quarter of decline. Analysts said that although Tesla has resolved some of the problems that caused difficulties earlier this year, including the suspected arson attack near its factory near Berlin and the transportation diversion caused by the Red Sea conflict, the consecutive decline in delivery volume for two quarters makes the company almost no excuse for sales slowdown, which can only be attributed to a relatively simple problem: Tesla's older models are becoming increasingly difficult to keep up with the competition of new electric vehicles from competitors.

"When you face more competition and your current model lineup is somewhat outdated, growth becomes more difficult," said Tom Narayan, a global auto analyst at RBC Capital Markets, who has a buy rating on Tesla shares.

Tesla CEO Musk has tried various ways to stimulate demand for Tesla cars, including significant price cuts and offering low-priced lease deals. However, these discounts did not prevent sales from slowing down in the second half of last year, and sales eventually declined as the entire electric vehicle market cooled down.

Musk also announced significant layoffs in April, affecting more than 10% of Tesla employees, including sales staff. Analysts believe that although this may help the company save cash, it may also have an impact on its Q2 deliveries.

In addition, first-time electric car buyers typically have many questions about battery life, charging stations, and software-based features. However, Musk is increasingly betting on the main online sales process, encouraging consumers to order Tesla without a showroom.

At the same time, as the world's best-selling model last year, Tesla seems to be struggling to build on the success of Model Y. Model Y was launched as early as 2020, and Model 3 was launched as early as 2017. As Tesla's only new product, its first pickup truck Cybertruck has progressed slowly since the end of last year, and has encountered multiple recalls, including issues with accelerator pedals and windshield wipers.

Driven by peers and anticipating Robotaxi, Tesla's stock rose significantly on Monday.

However, investors have reacted indifferently to several analysts recently lowering their Tesla vehicle delivery expectations in the past few weeks. On Monday, Chinese electric vehicle companies such as NIO Inc. and Li Auto Inc. reported that their vehicle deliveries in June increased year-on-year, and both companies' stock prices increased by nearly 7% in the US stock market on Monday.

Boosted by the surge in their competitors' stock prices, Tesla's stock price rose by nearly 8% on Monday, marking its fifth consecutive day of gains, the longest such streak in nearly a year.

In addition, Musk promised to launch a new model as soon as the end of this year, which boosted the stock price. He also talked about the prospects of the company's humanoid robot at last month's shareholder meeting and plans to release a dedicated robot taxi in August.

Analysts said that more and more investors are focusing on Tesla's Robotaxi launch in August. Ben Kallo, an analyst at Robert W. Baird, said that although Q2 deliveries are particularly important for annual data and whether 2024 will be a growth year, the bank expects that investors' focus will be on the long term, to see the release of Robotaxi.

Kallo expects Tesla to deliver 435,200 cars in the third quarter, and about 1.83 million cars for the whole year, slightly higher than the total in 2023. Although Tesla promised to launch a new model at the latest next year in April, it did not provide any details about these cars and reiterated that growth in 2024 will be "significantly lower" than this year.

Wells Fargo Bank: it's still going to fall 40%.

On Monday, Wells Fargo & Co included Tesla in its "strategy recommendation list." The bank's analysts said that Tesla's stock price may suffer in the third quarter because the strategy of boosting sales through price reductions has lost its momentum. The bank predicts that Tesla will deliver 1.55 million autos this year, a 14% decrease year-on-year and below the market's general expectation of 13%. The Wells Fargo & Co recommended a shareholding investment opinion for Tesla and set a target price of $120 per share, which means there is nearly 40% downside potential from Friday's closing price of $197.88. As of Monday morning on the US market, Tesla's stock price has fallen nearly 17% this year so far.

Wells Fargo & Co also expressed concerns about demand and profitability for Tesla's small mass-market Model 2. The bank predicted that lower deliveries and price reductions could lead to a 44% year-on-year decrease in Tesla's eps. "We are cautious about profitability because price reductions and sales declines are likely," said the Wells Fargo & Co analyst. "In addition, we are concerned about the launch of its next-generation models and their demand and profitability."

Wells Fargo & Co analysts said that the ownership rate of electric autos in the US and EU has become stable, and Tesla is facing fierce competition from companies such as BYD Company Limited in China. "There are almost no immediate means available to increase sales," the bank said.

The bank holds a shareholding investment opinion for Tesla and set a target price of $120 per share.

"We are cautious about profitability because price reductions and sales declines are likely," said the analyst from Wells Fargo & Co. "In addition, we are concerned about the launch of its next-generation models and their demand and profitability."

Editor/Lambor