Tesla Deliveries Fall Short of Estimates Amid Logistical Issues and Slowing Demand, Reports Reuters

By Akash Sriram and Baranjot Kaur

Tesla Inc. announced on Monday that its quarterly vehicle deliveries fell short of market expectations, hindered by ongoing logistical challenges and rising concerns about demand, marking a tumultuous year for the company led by Elon Musk.

Despite the setbacks, Tesla remains the world’s most valuable automaker, although it experienced a significant decline of 65% in its market value throughout 2022. Following the news, shares dropped 8.5% to $112 on Tuesday.

In the fourth quarter ending December 31, the company delivered 405,278 vehicles, which missed analysts’ projections of 431,117 according to Refinitiv. The total deliveries for 2022 were up by 40%, but fell short of Musk’s annual target of 50%.

Bernstein analyst Toni Sacconaghi expressed concerns, stating, "We believe Tesla is facing a significant demand problem … many investors underestimate the magnitude of the demand challenges Tesla is facing." The delivery shortfall revealed significant logistical difficulties, with a widening gap of 34,000 vehicles between production and deliveries as more cars were delayed in transit.

Tesla is also expected to continue a reduced production schedule at its Shanghai facility in January, following a lowered output that began in December.

To stimulate demand amid growing competition from traditional automakers like Ford and General Motors, as well as newer companies such as Rivian and Lucid, Tesla has introduced discounts on its best-selling models.

Investment director Russ Mould indicated that Tesla’s previous success stemmed from delivering rapid growth. "Without that, it looks like a different proposition," he noted. Sacconaghi also mentioned that demand challenges would likely persist into 2023, as many Tesla models do not qualify for tax rebates. Consequently, the company may need to either lower its growth targets or reduce prices.

Tesla, which boasts some of the highest profit margins in the industry, will report its quarterly results on January 25. In the fourth quarter, deliveries included 388,131 Model 3 sedans and Model Y SUVs, alongside 17,147 Model X and Model S luxury vehicles. Overall production reached 439,701 vehicles.

In a separate announcement, Tesla revealed plans to host its Investor Day on March 1, where long-term expansion and capital allocation strategies will likely be discussed during the event at the Texas Gigafactory. The automaker also hinted at a new "generation 3" platform that may be unveiled to investors at this event. Musk had previously mentioned that a "next-generation vehicle" was in development, which would be more affordable and smaller than the current Model 3 and Model Y.