Tesla’s Earnings: Margins, Deliveries, and Self-Driving in Focus

         

Summary: Investors express concerns as Tesla’s margins are expected to decline in the third and fourth quarters due to price cuts in a competitive market. Key areas of interest include delivery targets, margins, the upcoming Cybertruck launch, progress in full-self driving technology, and updates on the Mexico factory.

Tesla investors are closely watching the company’s upcoming earnings report as concerns rise about the impact of price cuts on margins. With competition from Chinese automaker BYD and a high-interest rate environment, Tesla has sacrificed some profitability to drive sales of its existing vehicle lineup. Thomas Martin, a senior portfolio manager at Tesla shareholder Globalt Investments, believes that more price cuts may be necessary due to weak demand.

One of the main areas of interest is Tesla’s delivery targets. CEO Elon Musk aims to deliver a record 476,000 vehicles in the fourth quarter to meet the annual goal of 1.8 million units. Tesla has already reduced prices for its Model 3 and Model Y in the US, and recently announced price cuts for its premium models. However, the new Model 3 has yet to be delivered in China and Europe, and there is no timeline for its US launch.

The ongoing price war has taken a toll on Tesla’s margins. Analysts predict that the company’s margins, excluding regulatory credits, reached a four-year low of 18.1% in the July-September period. They anticipate further decline in the fourth quarter, with margins potentially dipping below 15%. While the recent decline in lithium prices may provide some help, it is unlikely to offset the impact of the price cuts.

Another topic of interest is the delayed launch of Tesla’s Cybertruck, originally scheduled for September. CEO Elon Musk cited the truck’s challenging design as the reason for the delay. The initial projected price of under $40,000 for the Cybertruck has likely increased due to rising electric vehicle prices. Gary Black, managing partner of The Future Fund, estimates that the single motor version will cost around $49,900, the dual motor version around $59,900, and the tri-motor version around $79,900.

Tesla’s progress in full-self driving technology is also under scrutiny. While CEO Elon Musk has touted the potential of this technology to boost Tesla’s value, the company has faced regulatory scrutiny and safety concerns. In August, Tesla reduced the price of its full-self driving option by 20%, leading analysts to speculate that further price cuts may be on the horizon.

Finally, investors are eager for updates on Tesla’s planned factory in Mexico’s Nuevo Leon state. The facility, announced in March, is expected to begin construction pending final permits. The Mexican government has indicated that the permits could be ready in the coming weeks. Overall, investors will be closely monitoring these key areas of Tesla’s earnings report to gauge the company’s performance and strategy moving forward.

Tags: Tesla, earnings, margins, deliveries, self-driving, Cybertruck, Mexico factory

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