Tesla poised for quarterly delivery record despite demand concerns

Tesla is expected to announce record quarterly deliveries early in January but that may not be enough to satisfy investors as the automaker grapples with inflation, rising interest rates, crimped production in China and concerns about softening demand.

In an effort to clear inventory, Tesla offered a rare $7,500 discount to U.S. customers who took delivery of a new Model 3 or Model Y at the end of the year, along with 10,000 miles (16,000 km) of free supercharging.

The Inflation Reduction Act, or IRA, has restored up to $7,500 in federal tax credits for certain EVs starting on Jan. 1.

Deliveries are one of the most closely watched metrics by investors eager to see if Tesla can maintain its rapid growth. Global fourth-quarter deliveries could reach 420,760 vehicles, according to 16 analysts surveyed by Bloomberg. That estimate, which does not include some of the more recent analyst projections, exceeds the record 343,830 cars delivered in the third quarter.

Tesla is the world’s dominant seller of EVs and is well positioned to take advantage of some of the IRA’s tax credits for battery cell manufacturing and locally assembled EVs. But in order to meet its goal to grow deliveries by 50 percent annually over several years — an objective Tesla warned it will fall just short of in 2022 — Tesla will likely make compromises when it comes to gross margins.

Tesla has cut prices across its lineup in China and scheduled down time at its plant in Shanghai.

Investors are signaling skepticism. Tesla shares plunged 65 percent this year, more than triple the 19 percent decline in the S&P 500 Index.

In April, CEO Elon Musk said Tesla would produce more than 1.5 million vehicles in 2022. The company made 929,910 cars through the first three quarters, so it would have needed to produce more than 570,000 vehicles in the final quarter to meet that goal.

In the third quarter, production exceeded deliveries by more than 22,000 vehicles, a gap that could have continued in the last quarter as some cars were still in transit as the year came to an end.

Ben Kallo, an analyst at Robert W. Baird, reduced his estimates for fourth quarter and 2023 deliveries in a recent note “to account for the reported slowdown in production and a weakening macro environment.” Kallo expects the automaker to report deliveries of 378,262 for the quarter.

“I’m worried about the general economic environment,” Kallo said in an interview on Bloomberg Television. “Do people have the wallets to pay for $60,000 cars? That is what the market is worried about too.”

Tesla’s Model 3 sedans and Model Y SUVs account for the vast majority of sales.

Tesla sold cars until midnight on New Year’s Eve and will report the global delivery and production totals within three days of the quarter’s end.

The company has a long history of going all-out at the end of the quarter, with Tesla employees from across the company pitching in to help hand over cars to customers.

On the last earnings call, Chief Financial Officer Zachary Kirkhorn said that one-third of the quarter’s deliveries happened in the final two weeks of the third quarter.