Tesla falls short of Q3 delivery estimates amid factory upgrades

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Tesla, the world’s leading electric vehicle maker, reported lower-than-expected deliveries for the third quarter of 2021, as it faced production challenges due to planned factory upgrades and chip shortages.

Factory downtimes affect production and deliveries

Tesla said it produced about 238,000 vehicles and delivered over 240,000 vehicles in the third quarter, a 27% increase from the same period last year, but a 7% decline from the previous quarter. The company attributed the sequential drop in volumes to planned downtimes for factory upgrades, as discussed on its most recent earnings call. Tesla also said its 2021 volume target of around 1.8 million vehicles remains unchanged.

The factory upgrades are aimed at rolling out a newer version of the Model 3 mass-market sedan in China and Europe, replacing older models. The updated Model 3 is expected to have a longer range, a faster acceleration, and a redesigned interior. Tesla said deliveries of the new Model 3 will start in the fourth quarter, along with a Cybertruck launch event later this year.

Tesla faces competition from rivals in key markets

Tesla’s lower-than-expected delivery numbers come at a time when the company is facing increasing competition from other automakers in the electric vehicle market, especially in China and the US, its two largest markets.

Tesla falls short of Q3 delivery

In China, Tesla’s sales have been affected by regulatory scrutiny, consumer complaints, and rising competition from local players such as Nio, Xpeng, and BYD. In the US, Tesla is facing challenges from legacy automakers such as Ford and GM, as well as newcomers such as Rivian and Lucid, who are launching their own electric vehicles.

Tesla’s market share in the global electric vehicle market has declined from 29% in 2019 to 24% in 2020, and is expected to drop further to 21% in 2021, according to a report by LMC Automotive. The report also said that Tesla’s growth rate will slow down from 28% in 2020 to 14% in 2021, while the overall electric vehicle market will grow by 50% in 2021.

Tesla shares fall after delivery miss

Tesla’s delivery miss disappointed Wall Street analysts and investors, who had expected the company to deliver about 461,000 vehicles in the third quarter, according to FactSet Research. Tesla’s shares fell by about 2% in early morning trading on Monday, after the delivery announcement. The stock has gained about 10% year-to-date, but has underperformed the S&P 500 index, which has risen by about 17% in the same period.

Tesla’s delivery numbers are closely watched by analysts and investors, as they are a key indicator of the company’s financial performance and growth prospects. Tesla’s revenue and profit depend largely on its vehicle sales, as the company derives most of its income from selling electric vehicles and related products and services. Tesla’s third-quarter earnings call is scheduled for October 18, after the market close.

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