ii view: Tesla shares reverse at speed

Fourth-quarter and full-year deliveries and production to 31 December

• Q4 deliveries of 495,580 vehicles, up from 462,890 in the previous quarter
• Q4 total production of 459,445 vehicles, down from 469,796 in the previous quarter
• FY 2024 deliveries of 1,789,226 vehicles, down from 1,808,581 in 2023
• FY production of 1,773,443 vehicles, down from 1,845,985 in 2023

ii round-up:

Electric vehicle (EV) maker Tesla Inc (NASDAQ:TSLA) detailed quarterly vehicle deliveries, the nearest number it gives to sales, that missed Wall Street forecasts.  

Deliveries of 495,580 vehicles was up from 462,890 in the previous quarter and a record for a fourth-quarter, but shy of analyst estimates of around 510,000. Deliveries for all of 2024 at 1,789,226 vehicles was down from 1,808,581 in 2023, representing the first annual decline in over a decade.  

Shares in the Nasdaq 100 company fell 6% in post announcement US trading having gained 63% in 2024 and 21% in December alone. CEO Elon Musk’s help in achieving a win for Donald Trump could potentially see the new President returning the favour via moves such as passing legislation to assist self-drive, or autonomous vehicles. Strike-hit Volkswagen AG (XETRA:VOW) saw its share price fall by 22% in 2024. 

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Heavy EV competition from rivals such as China’s BYD, Korea’s Hyundai, Germany’s Bayerische Motoren Werke AG (XETRA:BMW) and Volkswagen likely fuelled the 1% fall in annual sales. Telsa is expected to launch its new cheaper Juniper model early to mid-2025. 

In October, Elon Musk predicted vehicle delivery growth of between 20% and 30% for 2025, aided by factors such as lower production costs, cheaper vehicle prices and self-driving and ride hailing developments. 

Fourth-quarter production of 459,445 vehicles fell from 469,796 in the previous third quarter and fed into annual 2024 production of 1,773,443 vehicles, down from 1,845,985 in 2023. 

Energy storage deployments for 2024 rose to 31.4 Gigawatt hours (GWh), a 113% gain from 2023. Tesla provides either roof solar tiles or more traditional solar panels which can be linked to its home storage batteries, enabling a property to potentially become electricity self-sufficient. 

Broker Morgan Stanley reiterated its ‘overweight’ stance on the shares post this latest announcement, highlighting Tesla as a ‘top’ pick’.   

Fourth-quarter financial results are due on 29 January. 

ii view:

Started in 2003 by founders Martin Eberhard and Marc Tarpenning, Tesla today employs around 140,000 people. Producing only electric vehicles, manufacturing is spread across two factories in the US, as well as plants in both China and Germany. Geographically, the US dominants with close to half of all sales, with China accounting for just over a fifth and other markets including the UK making up the balance of close to a third. 

For investors, competitors including Ford Motor Co (NYSE:F) and Mercedes-Benz Group AG (XETRA:MBG) are all now actively pushing their own EV models. Group capital expenditure increased 43% during the third-quarter year-over-year to $3.51 billion, with investment in self-driving software, AI and even potential products such as robots and drones likely ongoing. Borrowing costs to finance a vehicle purchase remain heightened, while an estimated price-to-net asset value (NAV) of around 19 times compares to estimates for rivals at under two times, suggesting the shares are not obviously cheap.

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On the upside, innovative manufacturing techniques including casting one major bodywork item instead of welding together many are reducing costs and therefore potential vehicle sale prices.  Climate change concerns are not going away. Innovative products such as self-driving software and a Robotaxi could potentially generate significant profits in the future, while growing sales for its solar and energy storage systems should not be forgotten.

Slow generation of profits from newer projects like Robotaxi's do generate grounds for caution, and more risk-averse investors might continue to monitor events. However, innovation and market leading positions such as that for its growing network of super-fast charging stations, offer further hope, and Tesla fans might view any pullback as an opportunity.

Positives: 

• Climate change concerns persist
• Expanding network of superfast charging stations

Negatives:

• Rising competition from other manufacturers
• Potential regulatory hurdles for self-driving vehicles

The average rating of stock market analysts:

Hold