Tesla is in the spotlight ahead of highly-anticipated Q1 deliveries report

Tesla (TSLA) will report Q1 deliveries sometime during the first few days of April in what could be a key turning point in the bull vs. bear debate.

The shutdown of the electric vehicle maker's Model Y factory near Berlin over the last few weeks due to an arson attack, and soft demand in China during the Chinese New Year holiday are likely to have held back the overall deliveries tally. Sell-side sentiment has been bearish as of late, and the consensus deliveries expectation for the quarter has dropped all the way down to 425K from 494K just a few months ago. By comparison, Tesla delivered 484,507 vehicles in Q4 and delivered 422,875 a year ago in Q1. Ahead of the big report, Baird warned that the consensus mark may still be too high.

The firm sees Q1 deliveries for Tesla of 421K and Q2 deliveries of $445K vs. 512K consensus. Citi is also expecting a deliveries miss, with its estimate recently cut to 430K. Goldman Sachs said other data points also suggest slower sales for Tesla to start the year. "Specifically, downloads of the Tesla app in the US and in Europe have declined sequentially when comparing the first two months of 1Q24 vs. 4Q23, and app downloads YTD are down yoy vs 1Q23 in the US per Sensor Tower data, updated analyst Mark Delaney).

HSBC went a step further and cut margin estimates on Tesla. Analyst Michael Tyndall noted that cheaper Teslas are not necessarily driving higher volumes. "We can see that these price cuts might be supported by cost improvements, but we are not convinced continued devaluation is what the market wants," he noted. He also warned that Teslas have had the dubious honor of being the fastest-depreciating vehicles in the U.S. over the last few months, as professional buyers like Sixt and Hertz Global (HTZ) have elected to reduce their Tesla fleets due in part to uncertain used pricing.

Even Wedbush Securities analyst Dan Ives is sounding the warning bell on Tesla (TSLA), with Elon Musk and the company getting attacked by the bears from all directions. "But unlike other times, now it's warranted as growth has been sluggish and margins showing compression with China a nightmare," he noted. Ives said that the next few months could be critical for Musk to get Tesla through a turbulent period otherwise darker days could be ahead.

Looking further down the road, there have been some reports indicating that Tesla (TSLA) will scale back production at Giga Shanghai from operating six and a half days per week to five, which could impact the forecast for Q2 deliveries and add some punch to the slowing demand narrative.