Tesla (TSLA) vehicle insurance registrations in China rose last week as deliveries of the revised Model 3 continue to pick up. Meanwhile, Tesla appears set to raise prices on all Model Y vehicle trims in China in the coming weeks, a sign that profit margins may have bottomed out in the third quarter. TSLA shares rose on Tuesday.
Tesla insurance registrations in China totalled 14,000 for the week ending 5 November, up nearly 30% from 10,800 in the previous week, according to data compiled by CnEVPost. These are the first figures to represent a full week since Tesla began deliveries of 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 though Tesla is targeting record Q4 numbers to reach its 2023 goal of 1.8 million vehicle deliveries.
Tesla sold 72,115 Chinese-made vehicles in October, up 0.57% from 71,704 a year earlier but down 2.6% from 74,073 in September, according to data released Thursday by the China Passenger Car Association (CPCA).
Meanwhile, several Tesla salespeople in China have confirmed that prices for lower-end Model Y trims will soon rise, according to local media reports. At the end of October, Tesla raised the price of its Model Y Performance trim by $1,920. This could be a sign to investors that the big price cuts are mostly over and that margins will not fall below Q3 levels.
Tesla shares pared early losses and were up 1.4% at 222.27 on Tuesday. On Monday, TSLA was down 0.3% at 219.27.
Tesla needs to set delivery record
The EV company unveiled its new Model 3 in China on 1 September, with official sales starting on 19 October. The global EV giant started deliveries of the Model 3 on 26 October. Tesla also launched a slightly updated Model Y in early October.
Five weeks into Q4, Tesla China’s insurance registrations, a rough proxy for vehicle deliveries, totalled 42,800, down about 7% from the same time in Q3.
By the end of Q3, Tesla had delivered about 1.3 million vehicles worldwide, meaning the company needs to deliver 480,000 in Q4 to reach 1.8 million. That’s 3% more than the record 466,000 deliveries in the second quarter. Tesla reiterated its 1.8 million vehicle delivery target in its third-quarter results.
However, since 18 October, analyst forecasts have fallen. The Wall Street consensus calls for Tesla to deliver 1.79 million vehicles in 2023, just below the 1.8 million target, according to FactSet. The average analyst EPS estimate for 2023 has also fallen 5% since Q3 earnings.
Wall Street is also predicting that 2024 earnings will now underperform 2022, with analysts expecting EPS of $3.94 – down 12% from $4.50 before Q3 earnings.
Tesla shares fall after third quarter results
TSLA shares have fallen around 10% since the company reported lower-than-expected third-quarter earnings and revenue on 18 October. Tesla reported a 37% drop in third-quarter earnings to 66 cents per share, the lowest in two years for Chief Executive Elon Musk. However, quarterly revenue rose 9% to $23.35 billion. Tesla’s auto gross profit margins, excluding regulatory credits, fell to 16.3%.
Musk also preached caution on the earnings call, warning investors about the upcoming Cybertruck and the broader economy. The next day, Tesla shares fell 9.3%.
Since the start of 2023, Tesla shares have gained around 78%, largely outperforming the broader S&P 500 index. Meanwhile, Tesla is set to begin preliminary deliveries of the Cybertruck on 30 November.
Last week, Tesla shares rallied, gaining 6.1% to 219.96. On Friday, the stock regained its 200-day moving average, but has struggled to hold that support.
Tesla stock ranks sixth in IBD’s 35-stock automaker industry group. The S&P 500 component has a Composite Rating of 85 out of a possible 99. Tesla stock also has a Relative Strength Rating of 82 and an EPS Rating of 89.
