Tesla is gearing up to unveil its third-quarter earnings report, a key event for investors and industry analysts alike. This report is expected to reveal earnings per share (EPS) of approximately 58 cents, in line with consensus estimates from LSEG. Revenue projections hover around $25.37 billion, which marks a significant metric for evaluating the company’s performance in a competitive automotive landscape. Earlier this month, Tesla announced third-quarter vehicle deliveries totaling 462,890—numbers that, while reflecting a modest 6% annual increase, fell short of analyst expectations. Furthermore, the total production for the same period logged in at 469,796 electric vehicles, highlighting a pivotal moment in Tesla’s operational metrics.
The vehicle delivery statistics represent Tesla’s closest approximation to sales, yet the company experienced a setback having diminished sales momentum over two successive quarters. Analysts have noted these fluctuations, particularly as they relate to a broader downturn in the electric vehicle (EV) market, where competitive pressures are intensifying. To combat these challenges, Tesla has adopted various discounting strategies and sales incentives, which, while effective in driving short-term sales, could adversely impact profit margins in the long run. This delicate balance between stimulating sales and maintaining price integrity is a pressing concern for Tesla.
Adding an intriguing layer to Tesla’s narrative is CEO Elon Musk’s fervent political activism. As the presidential election draws near, Musk’s active support for Republican nominee Donald Trump has raised eyebrows among investors. Questions regarding the ramifications of Musk’s political involvement and its effect on Tesla’s stock price have surfaced frequently in investor forums. Notably, Musk has committed significant financial resources to Trump’s campaign, despite the former president’s past opposition to federal spending that supports renewable energy and EV infrastructure—areas that have critically benefited Tesla. At a recent public appearance, Musk expressed skepticism towards government institutions, suggesting a generally adversarial relationship with regulatory bodies that further complicates the corporate image of Tesla amid growing scrutiny.
Escalating Competitive Landscape
Tesla’s robust market position is increasingly threatened by rapid advancements in the electric vehicle sector, particularly in China, where companies like BYD and Geely pose strong competitive challenges. Moreover, U.S. legacy automakers such as Ford and General Motors are stepping up their EV efforts, seeking to reclaim market share from Tesla even as they navigate their own evolving commitments to electrification. Analysts from Jefferies have pointed out a worrying trend where the gap between Tesla and traditional OEMs appears to be stagnating, revealing an industry maturing to a point where growth is no longer guaranteed.
With production capabilities now adequately met, analysts foresee Tesla facing a period of subdued growth over the next couple of years as its core models age. This situation is compounded by growing difficulties in scaling operations while managing both variable and fixed costs effectively. Recommendations from industry analysts suggest investors should adopt a cautious approach, advocating a “hold” position on Tesla stock as uncertainties loom.
Despite these challenges, shareholders remain keenly interested in Tesla’s innovations, particularly its highly anticipated Cybertruck. Reports indicate that Tesla sold over 16,000 Cybertrucks in the U.S. during Q3, a notable statistic given the ongoing quality concerns surrounding the vehicle. As the company forays into developing autonomous technologies, including robotaxis, self-driving software, and humanoid robots, investors are eager for updates that shed light on the profitability and market perception of these initiatives.
While Tesla has yet to provide concrete guidance for 2024, executive commentary suggests an expectation of slower delivery growth compared to the previous year, a point of concern for investors who have faced a turbulent stock performance. As of now, Tesla shares have plummeted by 13% year-to-date, contrasting sharply with a 23% gain in the Nasdaq. This disconnect calls for a more robust discussion on Tesla’s long-term strategy and market positioning as it navigates a complex array of competitive, political, and operational dynamics.