Tesla’s inventory (TSLA) surges in early trading after China supplies reveal strong quarter-end performance, but will it be enough to salvage Q3?
According to Chinese insurance data, Tesla’s domestic sales slumped by 3.7%, falling short of the previous week’s impressive 16,200 registrations, with only 15,600 vehicles being delivered within the country last week.
The robust start to September sees an impressive 31,800 new registrations. Tesla’s local sales in China are mainly comprised of vehicles produced at Gigafactory Shanghai, with a notable exception being the end-of-quarter production batches that aim to minimize vehicles in transit.
Tesla typically concludes its quarterly periods strong, driven by a surge in deliveries during the final weeks.
According to the China Passenger Automotive Association, Tesla China delivered 86,697 locally produced electric vehicles in August, just surpassing the 74,000 units delivered in July.
Tesla is poised to deliver more than 230,000 electric vehicles from and into China during the third quarter.
Will China dodge Tesla’s third-quarter waste?
Tesla introduced a groundbreaking 0% financing initiative in China last year to revitalize flagging demand, and the strategy has undoubtedly paid dividends.
Despite this, various markets are underperforming to a significant extent.
According to registration data, Tesla’s European deliveries appear poised to decline this year.
Sales of Tesla vehicles have plummeted by more than 70,000 units in the company’s largest European markets over the past year. The significance of this distinction has taken on added importance due to the proliferation of over 10,000 models that have come to market since our last check-in in August.
Electrek’s Take
China is poised to help Tesla mitigate some of its challenges in the EU, but not entirely address them.
In Q3, a key differentiator may be the US market, where Tesla has faced challenges; however, it recently introduced strong incentives to boost sales efforts.
The brand’s newly launched referral program is designed to deliver a $1,000 discount on all vehicles except for the Cybertruck. While Cybertruck production isn’t expected to be overwhelming, its ongoing ramp-up will still contribute tens of thousands of units to Tesla’s overall delivery tally in Q3.
Recently, Tesla introduced new financing incentives in the US, which are poised to have a significant impact by the end of the quarter.
Based on current data, it appears likely that Tesla will surpass its fourth-quarter delivery figure of 443,956 vehicles, potentially indicating a return to year-over-year growth for the company, as it had delivered 435,000 units during the same period in 2022.
Despite this, I believe Tesla will significantly fall short of its target to deliver 585,000 vehicles and remain on track to meet its ambitious goal of two million deliveries by 2024. To avoid a year-on-year decline in deliveries, they’ll need to produce around 485,000 vehicles and maintain that pace consistently throughout the 12-month period.
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