Tesla desperately needs Musk’s robotaxis to live up to the hype: Liam Denning

Tesla's third-quarter vehicle deliveries fell short of expectations, reflecting the company's ongoing challenges. Although deliveries rose 6% year-over-year, factory downtime in 2023 inflated that figure, and annual sales are still down 2%. Tesla needs a record-breaking final quarter to meet annual targets, but competition is intensifying, especially from rivals like Nio and GM. With flatlining financials and excess inventory, all eyes are on Elon Musk's Oct. 10 "robotaxi" event for a potential shift in focus..Sign up for your early morning brew of the BizNews Insider to keep you up to speed with the content that matters. The newsletter will land in your inbox at 5:30am weekdays. Register here..By Liam Denning.Guys, you were so close. If it wasn't for that last little bounce of Wall Street optimism on the last day of September, Tesla Inc.'s latest sales figure would have beaten estimates — just. .___STEADY_PAYWALL___.The more pertinent bit of that chart is actually the yawning gap on the left, tracing the steady drop in expectations for Tesla's core business. For all the talk this past week of Tesla's sales in China maybe pushing the quarter's total to 470,000 — reflected in that uptick in the consensus forecast — the obvious rejoinder is: Who cares? Even if Tesla had reported that number, which would also have been way below what was expected earlier this year, take a look at the chart below and ask yourself if it would have changed the fundamental picture here..It wouldn't have, putting all the more focus on the much-hyped Oct. 10 event where Chief Executive Elon Musk is expected to unveil "robotaxi" prototypes. .Bulls will cite the fact that deliveries were up 6%, year over year. Recall, however, that Tesla said it was held back by factory downtime in the third quarter of 2023, flattering any increase. Some other numbers also set that 6% in context. Through the first nine months of the year, sales are down 2%. In order to hit the consensus figure for annual sales, Tesla now needs to deliver just shy of 499,000 vehicles in the final quarter, which would mean reaching a new record — and even then, annual sales would be below the level of 2023..Read more: Tesla's South Africa launch delayed, refund issues persist.Assuming Tesla maintained its average selling price — which may be generous given continued discounting — these numbers imply revenue from auto sales of just over $20 billion in the third quarter. That would be up 5%, year over year, but actually lower than in the final quarter of 2022, almost two years ago, when Tesla sold about 60,000 fewer vehicles..There are two other noteworthy aspects to Wednesday's figures. First, Tesla produced almost 7,000 vehicles more than it sold, reversing the liquidation of inventory that happened in the second quarter. For the 11 quarters since the start of 2022, Tesla has built more vehicles than it sold in eight of them, adding up to almost 113,000 excess vehicles overall. We can expect this to hit cash flow when Tesla reports full results three weeks from now..Second, despite launching the Cybertruck in late 2023, sales of premium models haven't taken off; third-quarter deliveries were actually slightly lower than in the fourth quarter of 2023, when Tesla added the angular beast to its higher-priced lineup. Possibly, in an autos market struggling in general with the rising cost of vehicle ownership, at least some $100,000 Cybertruck sales have cannibalized those of the Model S and X..At best, Tesla looks set for another quarter of stagnant financials in its EV business. As in the second quarter, we can probably expect the company to have sold a lot of its hoard of greenhouse gas credits to shore up earnings — that is, rely on green subsidies (despite Musk's ever more strident right-wing posturing)..Growth in battery EV sales has slowed in general and competition is rising, epitomized by the recent release of Nio Inc.'s latest Onvo electric SUV in China, priced 17% below a comparable Model Y, and General Motors Co.'s sub-$30,000 (after subsidies) Chevy Equinox EV on Tesla's home turf. Above all, therefore, take it as read that Tesla's robotaxi event next week will see Musk lean even harder into the narrative of self-driving vehicles, artificial intelligence and robots. How else to justify the dissonance of a stock priced at 99 times forward GAAP earnings for a company that has been essentially flatlining for almost two years..Read also:.Tesla's stock plunges 12% after profit miss and robotaxi delay🔒 $1 trillion US market rout: Tesla, Nvidia tank, Nasdaq's worst day since 2022Tesla's profits lean left as Elon Musk swings right: Liam Denning.© 2024 Bloomberg L.P.

Tesla desperately needs Musk’s robotaxis to live up to the hype: Liam Denning

Related Stories

New Fed chair Warsh faces inflation and Trump pressure

US trial exposes social media 'quick buck' short-selling tactics

Breakthroughs for batteries could soon make them much better

Webinar: Accretiv doubles down on US industrial property