TESLA

Brand is close to being number one in sales in North America

Markets are bemoaning that Tesla’s third quarter didn’t meet analysts’ expectations, despite a strong revenue picture. On the basis of Q3 revenue of $21.5 billion, the corporation realized net income of $3.3 billion and an industry-best operating margin of 17.2 percent.

Why is Wall Street so glum?...Vehicle deliveries numbered more than 343,800, up considerably from the nearly 254,700 in the second quarter. Still, Wall Street expected it to be around 360,000 units, but Tesla couldn’t deliver all that it built, not because of parts shortages, but because of logistics problems. Tesla is aiming for 500,000 EVs in the fourth quarter, and annual sales growth of 50%, although most expect Tesla to miss it — but not by much.

And now comes word that, according to BloombergNEF estimate, Tesla could end up selling approximately 800,000 Model Ys in 2022, enough to earn it a spot among the world’s five best-selling vehicles, and the only American vehicle in the top five. Through the Oct. 1, Bloomberg estimates the company sold about 500,000 Model Ys, 200,000 or so in third quarter, although the exact number isn’t known.

Tesla sales are strong...But it looks like Tesla could nab bragging rights as building America’s bestselling vehicle by the end of the year, a title held by the Ford F-Series for more than four decades. Certainly it could be a close race; through Oct. 1, Ford sold 467,307 F-Series trucks according to Automotive News, less than the 500,000 Model Ys. But the Tesla Model Ys sales are sold worldwide, while the Ford F-Series remains an American-market vehicle. In 2021, Ford sold 562,000 F-150s, enough to earn it a top sales spot stateside, but only good enough for seventh place worldwide. 

The world’s most popular vehicle in 2021 was the Toyota RAV4 at 1.1 million, followed by the Toyota Corolla at 1.1 million, Honda CR-V at 903,000, Nissan Sentra at 693,000 and the Toyota Camry at 681,000. Given Toyota’s supplier struggles, it will be interesting to see how this list changes for 2022. 

Tesla’s factories in Texas and Germany continue to ramp up production, so it is possible that the Model Y could become the bestselling vehicle in the world in 2023, something Tesla CEO Elon Musk predicted last year.

                   Tesla remains at the top of the leaderboard among EV manufacturers

The road ahead is filled with potholes...But Tesla did admit that the positive results came despite “material headwinds” during the quarter. Certainly, markets are discounting automotive stocks, Tesla less so than most because they see it as less affected by the storm that’s brewing.

The economic environment is also rapidly deteriorating, and major purchases are expected to be impacted by rising interest rates, declining property values, and stock market volatility. High-end EV model saw rapidly increasing sales during the Pandemic, in part because white collar workers kept their jobs, cut back on their spending, and experienced a rise in the value of their homes and stock portfolios as a result of government stimulus efforts. But that’s over now; the atmosphere has changed, and it’s unclear how the premium vehicle segment will fare, although it should be less affected than mainstream segments.

Nevertheless, should the 800,000 number prove true, within three months, Tesla could join the rarified air among the five bestselling vehicles in the world. 

by Larry Printz, Detroit-USA