Tesla still a Buy or BYD, new it-Buy? Read & decide.

JC888
01-03

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What a way to start the new 2024 !

$Tesla Motors(TSLA)$ will be announcing its Q4 2023 deliveries on Tue, 02 Jan 2024.

Will it be a big number for the company?

Tesla is trying to bounce back:

  • From a disappointing Q3 2023 results.

  • While fending off Chinese competition for the title of the largest maker of battery electric vehicles in the world.

Wall Street estimates:

  • Wall Street expects Tesla to report deliveries between 475,000 and 480,000 units.

  • That would be a record from the Q2 2023 deliveries of 466,000 EVs.

  • Not to mention a “drastic” contrast to Tesla’s dismal Q3 2023 deliveries of 435,000 EVs, that aided plunging its stock price.

  • Any delivery number above 475,000 should be fine for the stock.

Post delivery numbers announced:

  • Anything can happen, though, following the report.

  • Historically, Tesla stock is usually volatile after reporting deliveries.

  • Shares have moved an average of about +/- 7%, up or down, based on the last 8 reports.

  • The stock has fallen three times and risen five times.

Interesting fact:

  • Tesla’s biggest rise was after Q4 2021 delivery report.

  • Share price rose almost +14%.

  • Conversely, it’s biggest fall followed Q4 2022 delivery announcement.

  • Share price gave up > -12%.

Analysts foresee that shares are likely to continue doing what they have done in recent trading after a delivery report.

Coming into Tuesday trading, Tesla shares are up about 5.50% over the past month. (see above)

Looking at Tesla’s historical pattern, the rise would be a small positive for Tesla stock.

A 2% move has been the smallest move coming into the report out of the past 8 quarters.

In 2023, Tesla stock rose +129.86%, after falling -65% in 2022. (see below)

Tesla on a global stage

Globally, Tesla’s growth in the last 5 years, have nothing been short of spectacular.

It has exploded upwards more than +800%, and Tesla has emerged as the EV manufacturer to beat in the automotive market.

The success comes from Tesla’s sales which jumped 30x in the same time period.

Sales share between the different Tesla models from 2016-2023 using data from CleanTechnica, an archive for news and data around clean technology. (see below)

Tesla’s Global Sales Thru the Years

Admittedly, it is difficult to trace the data accurately using above diagram.

Tesla’s global sales using data present in table format thru the years would be easier on the eyes.

  • From 2018 onwards, Tesla’s global sales began to skyrocket.

  • Although QoQ growth was not always positive, dips were followed by more breakout numbers.

  • Aside from this steep EV sales rise, another key factor to note is how Tesla’s lineup has changed.

  • Model “S” and “X” production has been ramped up.

  • These 2 luxury models further helped the brand build a prestigious image.

  • Since 2020, Tesla successfully pivoted to cheaper high-volume models like the Model “3” and ”Y”.

  • Year 2020 would go down history as it was the first year Tesla turned a profit thanks in part to the Model Y.

  • Both models remained the world’s best-selling EVs in 2023.

Jumping the gun.

While Tesla’s global sales look impressive and US’s Q4 2023 deliveries may exceed Q2 2023, I think Tesla is facing a lot more headwinds than its fans are willing to admit.

In 2023, BYD is the No 1 EV maker in China.

  • On 01 Jan 2024, $BYD Co., Ltd.(BYDDF)$ announced record December sales of 341,043 EVs, including plug-in hybrids.

  • Q4 sales hit 942,779, with full-year sales of 3,012,906, topping BYD's target of 3 Million.

  • BYD is China's largest automaker.

  • And has emerged as the world's #1 automaker in 2023.

  • The number of EV models qualifying for US EV tax credits fell from 43 to 19.

  • Telsa’s EVs lost the tax incentive as well.

  • Only the 3 models under $Stellantis NV(STLA)$ still qualify for the full $7,500 EV tax incentive - Chevrolet Bolt EV and EUV (2023 & 2024 model years),

    Chevrolet Blazer EV and Equinox EV (2024 model years) &

    Chrysler Pacifica PHEV (2023 & 2024 model years)

  • If Tesla’s Q4 2023 delivery hits target, it is highly likely that sales rebound was due to various expiring subsidies pulling forward demand.

  • To maintain elevated sales volume, Tesla is keeping up with its price cut strategy.

  • This will not go down well during Q4 2023 earnings reporting.

  • This is because the margin will be even more razor thin than ever.

  • And this latest move would cost the company $1.2 Billion a year.

After all that has been said and done, still interested to invest in Tesla ?

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  • Do you think Tesla will deliver a stellar Q4 2023 earnings ?

  • Do you think Tesla that started the price war will be able to come out tops in this cut throat discount game?

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