Wolfe Research on Tesla's Upcoming Q3 Deliveries

Tesla (NASDAQ:TSLA) is projected to deliver around 460,000 vehicles in Q3, according to Wolfe Research, aligning closely with market expectations and representing a 6% year-over-year increase and 4% growth from Q2. This figure is also in line with the consensus estimate of 461,000 deliveries.

Wolfe Research noted a flat delivery performance in North America, while record-breaking deliveries of 172,000 vehicles in China are expected to compensate for lower volumes in Europe. However, despite steady delivery numbers, the firm expressed concerns about Tesla’s profitability.

In Q2, Tesla's auto gross margins, excluding credits, fell to 14.6% due to price cuts on the Model Y that outpaced cost reductions. For Q3, Tesla introduced additional incentives, particularly in the U.S., potentially leading to a pricing headwind of $4,500 per vehicle. Wolfe Research estimates this could lower global revenue per unit by $550, with total price reductions averaging $1,000 per vehicle.

Despite these pricing pressures, Tesla’s ongoing cost reductions are expected to mitigate some of the impact. The company has been lowering its cost of goods sold (COGS) by $800-$900 per vehicle each quarter since late 2022. Wolfe Research anticipates that Tesla’s gross margins may see a slight improvement, rising to 15.2% in Q3, helped by fewer losses from the Cybertruck and deferred revenue recognition. Looking forward, Tesla's upcoming Robotaxi event on October 10 is seen as a potential near-term catalyst for the stock. Additionally, the firm expects the launch of Tesla's lower-cost model in early 2025 to alleviate pricing pressures and maximize production capacity.