Affordable drive: A Tesla Cybertruck and Model Y on show in a mall in Montreal, Quebec. When Tesla last reported quarterly earnings in October, Musk said his best guess was that the company could increase sales by 20% to 30% this year. — Bloomberg
NEW YORK: For all the exuberance about Tesla Inc benefitting from Donald Trump’s return to the White House, Wall Street isn’t so sure the carmaker can avoid its first annual sales decline in over a decade.
Analysts surveyed by Bloomberg are estimating the company may deliver around 510,400 vehicles in the final three months of the year.
That would set a new quarterly record for Tesla, but the company would need to sell about 4,600 more cars to make good on its forecast for slight growth in 2024.
Tesla has a lot riding on the production and delivery figures it’s expected to report today.
The carmaker added more than US$733bil in market capitalisation from Election Day through mid-December, when its valuation peaked at US$1.54 trillion.
While investors have been betting Musk’s emergence as the marquee donor to President-elect Trump will pay dividends for his companies, an annual sales dip could lead to some second-guessing.
Trump’s policy prescriptions are, after all, far from a slam dunk for Tesla.
While a federal framework for autonomous vehicle deployment is cause for optimism, it’s not clear the company’s technology is ready.
Trump’s advisers also are recommending that he repeal electric vehicle (EV) subsidies and roll back fuel-economy and tailpipe-pollution regulations that generate significant revenue for Tesla.
“This number is a total wild card,” Gene Munster, managing partner of growth investment firm Deepwater Asset Management, said of Tesla’s fourth quarter deliveries.
Munster is wary about Musk distancing himself from politically left-leaning consumers and embracing fans of Trump, who haven’t been buying EVs.
That said, the prospect of tax credits going away soon could “really juice” Tesla’s sales, he said.
Musk has maintained throughout the year that Tesla is between two “growth waves” and repeatedly predicted that autonomy will lead to a next leg of expansion.
The first touched off when the company began rolling out its most affordable EV, the Model 3 sedan, and followed that up with the smash-hit Model Y sport utility vehicle.
Whether Tesla manages to eke out any growth or not in 2024, the company lost significant momentum in the midst of a broader slowdown in the global EV market.
Even as China’s BYD Co continued its ascent up the sales charts, the company increasingly relied on the strength of its plug-in hybrid lineup.
Volkswagen AG, Mercedes-Benz Group AG and Volvo Car AB, meanwhile, were among the automakers to scale back their EV objectives for the coming years at some point in 2024.
In the United States, Ford Motor Co’s plug-in vehicle business is bracing for a US$5bil annual loss.
And in Japan, a potential partnership between Honda Motor Co and Nissan Motor Co to jointly work on software development, batteries and other EV components has given way to considerations of a full-blown combination under a joint holding company.
Even against this backdrop, Musk has offered an upbeat view on 2025.
When Tesla last reported quarterly earnings in October, the chief executive officer said his best guess was that the company could increase sales by 20% to 30% next year.
That outlook rests, in part, on Tesla launching more affordable models in the first half of this year that the company has yet to identify.
Chris McNally, an analyst at Evercore ISI, wrote in a report to clients that his best guess is Tesla will offer new variants of the Model 3 and Y that are US$4,000 to US$5,000 cheaper through an improved electrical architecture and “de-contenting”, a reference to using lower-cost parts or removing certain components or features. — Bloomberg
