Tesla reports quarterly deliveries after price cuts up 4% from Q4

April 2 (Reuters) – Tesla Inc posted record quarterly vehicle deliveries on Sunday, but quarterly sales growth moderated despite competition and a gloomy economic outlook weighing on cuts.

Tesla delivered 422,875 vehicles in the first three months of the year, up 4% from the previous quarter. This is 36% more than last year. In January, CEO Elon Musk said Tesla could reach 2 million vehicle deliveries this year, a 52% increase over last year.

Investors are heeding Musk’s gamble that cutting prices will spur sales, though they worry about eroding margins.

In January, Tesla cut prices by 20% globally, missing Wall Street delivery estimates for 2022, triggering a price war. The base Model Y, which sold for $65,990, is now priced at $54,990.

“If they hadn’t done the price cut, it would have been ugly. I think that tells you the economy is getting tougher,” Gene Munster, managing partner at Deepwater Asset Management, said Sunday.

“They showed an acceleration, but not as much as Elon suggested.”

Musk, who has missed his own ambitious sales targets for Tesla in recent years, said deliveries could hit 2 million vehicles in 2023, up from 1.3 million in 2022, barring external disruptions.

First-quarter deliveries compared with analyst expectations of 430,008 vehicles, according to Refinitiv data based on seven analysts.

Wall Street expects Tesla to deliver about 432,000 vehicles this quarter, according to an average estimate compiled by FactSet, according to the Wall Street Journal and CNBC.

Tesla missed expectations of analysts polled by Refinitiv and FactSet. Other estimates show Tesla beat Wall Street expectations with 422,875 vehicles.

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Analysts polled by Bloomberg expected 421,164 vehicles to be shipped.

Tesla investor Gary Black said in a tweet that the consensus estimate from more than 20 analysts was for 421,500 vehicles. Reuters could not independently confirm that number.

The consensus is “all over the place,” Munster said.

Tesla delivered 6% more of its flagship Model 3/Model Y vehicles in the first three months of this year than in the previous quarter. But deliveries for its more expensive Model X/Model S vehicles fell 38%.

The carmaker produced more cars than it produced in the first three months of the year at 440,808 vehicles.

The automaker ramped up production at new factories in Texas and Berlin, and China’s manufacturing rebounded from the hit of the COVID-19 lockdown. Tesla tweeted Sunday that its Texas factory built 4,000 Model Ys this week, while the automaker said in late February that its German plant was producing 4,000 cars a week.

More price cuts?

Barclays analyst Dan Levy said Tesla could be under pressure to cut prices further as more automakers agree to cuts and concerns about a weak economy persist.

Tesla did not immediately respond to questions from Reuters.

U.S. electric vehicle subsidies are likely to kick in on April 18 for some models, further clouding the demand outlook.

Tesla’s cuts in China have sparked a price war, with Chinese rivals including BYD and Xpeng slashing prices to protect market share amid dwindling demand.

Market leader BYD accounted for 41% of new energy car sales in the world’s largest auto market in the first two months of the year. In contrast, Tesla had an 8% share.

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Musk warned that the prospect of a recession and higher interest rates could cause EV makers to cut prices to sustain growth at the expense of profits. In January, Musk said that the price cut had spurred demand.

Tesla shares are up more than 68% this year on hopes the company will win a price war it has launched, and the stock is more than 50% below its November 2021 peak.

Shares have fallen since Tesla’s investor day on March 1, when Musk said little about how soon the EV maker might introduce a more affordable, mass-market vehicle.

Akash Sriram and Urvi Dughar report in Bangalore; Editing by Sriraj Kalluvila, Will Dunham and Lisa Schumacher

Our Standards: Thomson Reuters Trust Principles.

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