Tesla vehicle insurance registrations in China increased last week as deliveries of the revamped Model 3 continue to pick up. Meanwhile, Tesla appears set to raise prices in China on all Model Y vehicle trims, a hint that profit margins may have bottomed in the third quarter. TSLA stock edged lower Wednesday.
Tesla insurance registrations in China totaled 14,000 for the week ending Nov. 5, up nearly 30% vs. 10,800 the week prior, according to data compiled by CnEVPost. These are the first numbers that represent a full week since Tesla began delivering its new Model 3. Currently the numbers are not broken down to show Model 3 vs. Model Y registrations.
However, Tesla insurance registrations in China are still below Q3 levels, even as Tesla targets record Q4 numbers in order to reach its 2023 goal of 1.8 million vehicle deliveries.
Tesla sold 72,115 China-made vehicles in October, up 0.57% from 71,704 last year, but down 2.6% from 74,073 in September, according to China Passenger Car Association (CPCA) data released last week. On Wednesday, the CPCA presented more detailed numbers showing Tesla delivered 28,626 vehicles in China, up 66% vs. last year but down 34% from September. Tesla exported 43,489 China-made vehicles last month.
Tesla delivered a total of 47,164 China-made Model Y vehicles and 24,951 China-made Model 3 units according to the CPCA.
Meanwhile, multiple Tesla salespeople in China confirmed that prices on lower end Model Y trims will soon increase, according to local media reports. In late October, Tesla increased prices on its Model Y Performance trim by $1,920. This could be a sign to investors that big price cuts are mostly done and that profit margins will not drop below Q3 levels.
Tesla stock edged down a fraction to 222.10 Wednesday during market action. On Tuesday, TSLA gained 1.3% to 222.18.
Tesla Needs To Set A Deliveries Record
The EV company unveiled its new Model 3 in China on Sept. 1 with official sales beginning on Oct. 19. The global EV giant started delivering the Model 3 on Oct. 26. Tesla also launched a slightly updated Model Y earlier in October.
Five-weeks into Q4, Tesla China insurance registrations, a rough gauge for vehicle deliveries, totaled 42,800, down around 7% compared to the same time in the third quarter.
Through the end of Q3, Tesla delivered about 1.3 million vehicles globally, meaning the company needs to deliver 480,000 in Q4 to reach 1.8 million. That's 3% more than its record 466,000 deliveries in the second quarter. Tesla reiterated its 1.8 million vehicle delivery goal in its third-quarter earnings.
However, since Oct. 18, analyst projections have dropped. Wall Street consensus has Tesla vehicle deliveries in 2023 totaling 1.79 million, just below that 1.8 million target, according to FactSet. Analysts' average 2023 EPS estimate has also fallen 5% since Q3 earnings.
Wall Street is also predicting 2024 earnings will now undercut 2022, with analysts expecting EPS of $3.94 — down 12% vs. the $4.50 view before Q3 earnings.
Tesla Stock Falls After Third-Quarter Earnings
TSLA shares had dropped around 10% since the company reported worse-than-expected Q3 earnings and revenue on Oct. 18. Tesla reported third-quarter earnings down 37% to 66 cents per share, the lowest in two years for Chief Executive Elon Musk. Meanwhile, quarterly revenue increased 9% to $23.35 billion. Tesla's auto gross profit margins, excluding regulatory credits, fell to 16.3%.
Musk on the earnings call also preached caution, offering investors warnings about the upcoming Cybertruck and the broader economy. The following day, Tesla stock fell 9.3%.
Since the beginning of 2023, Tesla stock has advanced around 78%, broadly outperforming the broader S&P 500 index. Meanwhile, Tesla is due to begin the preliminary Cybertruck deliveries on Nov. 30.
Last week, Tesla stock rebounded for a 6.1% gain to 219.96. On Friday, shares reclaimed the 200-day moving average, but have struggled to hold that support.
Tesla stock ranks sixth in the 35-stock IBD automaker industry group. The S&P 500 component has an 85 Composite Rating out of a best-possible 99. Tesla stock also has an 86 Relative Strength Rating and an 88 EPS Rating.
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