Tesla’s third-quarter deliveries saw a promising increase, but the company’s shares slumped as investors sought even greater progress. The electric vehicle maker benefited from low-interest financing, attractive lease deals, and price cuts, which helped boost global deliveries. However, competition from legacy and startup automakers continues to pose challenges, and Tesla’s average vehicle sales price hit a four-year low. This blog post explores the factors behind Tesla’s latest delivery figures and the market’s mixed reactions. Tesla, Inc. is a leading player in the electric vehicle industry, known for its innovative technology and bold ambitions.
A Bright Spot Amid Challenges
Zoom Out: Tesla’s Q3 Deliveries Are Milestone As 2020 Vehicle Dispatches Up For First Time It turned a profit in its second quarter, with 462,890 vehicles delivered between July and September — a marginal increase from the 435,059 vehicles it shipped during that period last year. This surge resulted from a mix of advantageous low-interest financing deals, appealing lease arrangements, and targeted price reductions.
The Model 3 is Tesla’s most affordable car, and a $299 monthly lease as well as loans with rates as low as 1.99% put its electric vehicles in reach of more buyers. Those efforts, plus ongoing demand for Tesla’s vehicles in China, helped to boost the delivery figures. But shares of the company were still down nearly 4% in morning trading as investors had been expecting even better results.
Handling Competitive Pressure
Tesla saw its delivery numbers improve, but that hasn’t meant an easier year for the company as a whole. More and more, the electric vehicle industry has become a cutthroat business with legacy automakers trying to elbow their way in alongside hungry startups vying for at least a small slice of the pie. As Tesla’s model lineup has aged, the automaker has increasingly turned to heavy discounts—something that was practically unheard of as recently as a year ago—to help maintain stubbornly-strong sales.
Average vehicle sales priceIn terms of prices, analysts expected the average price that Tesla charged customers for its vehicles during the third quarter to be $42,500 – and that would be the lowest in more than four years. The fall in the average sales price is expected to weigh on the company’s industry-lifting profit margins, thereby bearing down on its margin performance. The sales dip also underlines the increased competition Tesla faces from other industry incumbents, that are also starting to take a bigger and deeper bite into the EV market.
Eyeing the Road Ahead
Moving forward, Tesla is expected to be making waves with the possible reveal of a purpose-built robo-taxi at an event down the road. This makes Tesla well suited to discover new frontiers in the world of autonomous driving, and maybe provide a bespoke solution to impending transit problems in futures.
Still, the market has some high-expectations about Tesla in long-term views, according to an investor note from BNP Paribas Exane. That means investors looking to snap up the company ahead of what proponents think will be a blockbuster sales performance are likely going to have to start tempering their expectations for its growth trajectory, because it could significantly underwhelm when 2026 and 2027 come around.
Tesla will need to use that flexibility and innovation from a burgeoning EV landscape even as it matures out of an environment where its tech prowess alone could move the sales needle, leaving nowhere for quality traditional competitors, like Audi, not too far behind. Maintaining the leader position by the company, continual strong financial results and keeping shareholders happy will be essential for success of business in future.
