Tesla.Inc. is a company which engages in the design, development, manufacture, and sales of fully electric vehicles, as well as power storage and photovoltaic systems. It is no longer one of the 10 largest companies as of early March, currently ranked 15th with its market cap over $514B. The company is scheduled to release its Q1 2024 earnings result on 23rd April (Tuesday), after market close.
Tesla Deliveries. Source: InsideEVs
In Q1 2024, Tesla reported total vehicle production at 433,371, down –1.69% compared to the same period last year. On the other hand, total deliveries hit 386,810, down over -8.5% from the same period last year (also the first decline ever since 2020, during the global pandemic outbreak that led to disrupted production). The quarter fall in deliveries was below even the most bearish estimation of analysts.
According to officials, the overall decline in volumes was partially due to the updated Model 3 being at the early phase of the production ramp, factory shutdowns following shipping diversions caused by the Red Sea conflict and an arson attack at Gigafactory Berlin.
Model 3/Y reported production and deliveries down over -2% (y/y) and over -10% (y/y), to 412,376 and 369,783, while other models (including Model S/X, the Semi) reported production and deliveries up over 8% (y/y) and 59% (y/y) respectively, to 20,995 and 17,027.
Global EV Market Share. Source: Counterpoint
Tesla took a hit following the global slowdown in electric vehicle demand. The electric car behemoth has seen its standing in the world’s biggest automotive market – China – being threatened when its Chinese rival, BYD overtook the crown as the top-selling electric car seller. In Q4 last year, BYD owned 18% of the global EV market share, whilst Tesla had undergone a decline in market share for three consecutive quarters, towards 16%.
In general, BYD’s cars are more budget friendly compared to Tesla, which explained the failure of the latter’s cost-cutting strategy earlier on. BYD has a number of offerings in the mass market, as well as providing a mix of hybrid and battery-powered cars. The hybrid option allows BYD to effectively expand its market especially in the Southeast Asia countries, when these emerging markets are still in early stages with limited access to battery-charging infrastructure.
More fierce competition is expected, as BYD has been actively establishing more factories overseas. Furthermore, recent penetration from the Chinese smartphone maker Xiaomi in an already saturated EV market shall pose more challenges for Tesla.inc. Failure to grapple with competition from cheaper rivals has even caused Tesla to announce cutting 10% of its global workforce last week.
On a positive note, Tesla’s CEO – Elon Musk – unveiled the company’s plan to reveal its long-promised robotaxi on 8th August. The vehicle which will be equipped with Full Self-Driving (FSD) feature, shall generate passive income for its owners by picking up and dropping off passengers.
Netflix: Income Statement Evolution (Quarterly Data). Source: Market Screener
In the previous quarter, Tesla.Inc reported $25.17B in revenue, up 7.8% from the previous quarter, and up 3.5% from the same period last year. For the FY 2023, its automotive revenue was up 15% from the previous year to $82.42B. Its energy division, services and other revenue were up 54% (y/y) and 37% (y/y), to $6.04B and $8.32B, respectively. Nevertheless, operating income was down -$2.1B from the same period last year, following reduced average sales price of the vehicles and an increase in operating expenses. Operating margin and net margin hit 8.2% and 31.5% in the quarter.
In the coming announcement, the S&P Global Market Intelligence projected the company’s sales revenue to reach $22.3B, down -11.4% from the previous quarter, and down -4.4% from the same period last year. Operating profit and net income are also expected to decline massively towards $1.55B and $1.48B, respectively. This would lead the operating margin and net margin to settle below 7% for the quarter.
Tesla: EPS. Source: Market Screener
EPS is estimated to hit $0.42, down over -81% from previous quarter $2.27. It was $0.73 in Q1 2023.
Technical Analysis:
#Tesla shares last closed below $150, following an “unmitigated disaster” on the company’s quarter sales numbers and concerns about waning demand. The asset has formed a new low since late January last year, with YTD losses over 40%. The overall trend remains bearish, with $167.80 and 100-week SMA serving as the nearest resistance. On the other hand, continuous selling pressure may lead the asset to test the next support, at $86.50.
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Larince Zhang
Market Analyst
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