Tesla's Q3 Delivery Slip Sparks Analyst Concerns: Is EV Demand Waning?

Tesla Inc‘s TSLA Q3 delivery numbers failed to meet expectations, prompting several analysts to voice concerns over the company’s future prospects. Truist Securities, Bernstein, and GLJ Research each provided insights, with issues ranging from pricing strategies, factory upgrades, and doubts over real demand for Tesla vehicles.

Here's what you need to know, and what the analysts think about the stock.

Deliveries, By The Numbers: The Elon Musk-led company said it produced 430,488 vehicles, down from 479,700 in the second quarter; 435,059 vehicles were delivered, down from the second quarter’s 466,140.

Tesla said the reduced numbers were a product of planned downtimes aimed at facilitating factory upgrades, and that its full-year 2023 volume target of around 1.8 million vehicles was unchanged.

The majority of the vehicles produced were Models 3 and Y, with 416,800 made, while Models S and X accounted for 13,688 of the vehicles produced.

The Truist Analyst: William Stein reiterated a Hold rating on Tesla, while lowering the price target from $254 to $243.

The Truist Takeaways: Stein said Musk's views on pricing and acceptable margins limit the value of the automotive business, adding that recent updates to Tesla's AI have not been encouraging. The analyst also cautioned investors about macroeconomic forces possibly affecting the company’s future prospects.

The Bernstein Analyst: Toni Sacconaghi remains bearish on Tesla, with an Underperform rating and a $150 price target.

The Bernstein Takeaways: Sacconaghi told investors that hitting the revised 1.8 million delivery mark for full year 2023 is achievable, but it would require a significant boost during the fourth quarter. Gross margins are a main focal point for Bernstein, which expects potential downside given the recent price cuts.

Longer-term, the analyst is skeptical over consensus forecasts for full year 2024, saying that more price cuts may not have been priced in.

Read also: Tesla ‘Clearly Missed Street Estimates’: Analysts Weigh In On Q3 EV Deliveries

The GLJ Research Analysis: Gordon Johnson reiterated a Sell rating on the stock with a $24.33 price target.

The GLJ Takeaways: Johnson, a known Tesla bear, was blunt about the company's misses for Q3, rejecting the commonly accepted rationale that the missed targets were due to line upgrades.

Johnson said that Tesla is dealing with a “Herculean” demand problem, suggesting that the real demand for Tesla vehicles has taken a hit. The analyst suggested that rather than line upgrades, global demand for Tesla cars fell by 44,600 cars quarter over quarter.

GLJ also criticized the consistent narrative shifts around Tesla’s delivery expectations, accusing Wall Street of neglecting its duty by adjusting delivery expectations downwards while still promoting a buy outlook for Tesla’s stock.

Johnson told investors that now is an “opportune” time to add short positions, or initiate a short position on the stock.

TSLA Price action: Shares of Tesla were trading 2.11% lower to $246.36 at the time of publication Tuesday, according to data from Benzinga Pro.

Read next: Why This Tesla Analyst Stays Bullish On EV Giant Despite Q3 Delivery Miss

Photo: Shutterstock