Future

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 Neither the author, Tim Fries, nor this website, The Tokenist, provide financial advice. Please consult our&nbsp;<a href="https://tokenist.com/terms-of-service/" style="text-decoration:underline;color:#3c7b7b" target="_blank" rel="noreferrer noopener" class="deco-link">website policy</a>&nbsp;prior to making financial decisions.
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<p class="has-drop-cap">On Sunday, Tesla published its latest <a aria-label="quarterly results (opens in a new tab)" href="https://ir.tesla.com/press-release/tesla-vehicle-production-deliveries-and-date-financial-results-webcast-second-quarter-2023" target="_blank" rel="noreferrer noopener nofollow" class="deco-link">quarterly results</a>, showing the manufacture of 479,700 electric vehicles. The EV bulk consisted of Model 3/Y, while Model S/X accounted for only 4% of the production.&nbsp;</p> 
<p>For both models, Tesla delivered 466,140 EVs in total. This is above-average performance as Wall Street expected the delivery range to be up to 447,000 cars. Bernstein analyst Toni Sacconaghi noted that this was Tesla’s sharpest quarterly estimate-trouncing since Q4 2021.</p> 
<p>Mirroring the good news, Tesla (TSLA) stock bounced significantly on Monday’s opening, going up 8%, from $261 to $282 per share. Year-to-date, TSLA has now clocked 160% gains. Investors should note that Tesla has manufactured more cars than delivered for the fifth consecutive quarter.</p> 
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   <em>Image credit: @SawyerMerritt</em>
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<p>This shows that EV demand is somewhat struggling. After all, a 2019 CarGurus survey revealed that 67% of would-be buyers cite high upfront costs as the biggest adoption obstacle. With inflationary pressures since this would have only increased.</p> 
<p>However, increasing the capacity to deliver EVs is a positive investor signal if global EV demand trends accompany it.&nbsp;In particular, if Tesla’s legacy competition is lagging.</p> 
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<h3 id="tesla-outpacing-legacy-automakers-joined-by-rivian">Tesla Outpacing Legacy Automakers, Joined by Rivian</h3> 
<p>Since Tesla became a popular brand, it has been the target of sustainability speculation on two fronts:</p> 
<ul> 
 <li>If EVs require government subsidies (green credits) to receive mass adoption, how much are they worth? Conversely, are EV stocks overpriced?</li> 
 <li>If legacy automakers like Volkswagen or Ford enter the EV game, will they wipe out the upstarts?</li> 
</ul> 
<p>So far, such predictions have fallen flat. At this point, mass adoption seems inevitable for the simple reason of governments/states introducing dates to end gas-powered car sales. The EU set this milestone to 2035, the same as California.&nbsp;</p> 
<p>Regarding the second concern, Volkswagen Group globally delivered only 141,000 battery EVs in Q1 2023. Likewise, Toyota Motor Europe sold 291,721 EVs in the same quarter, a 3% year-over-year increase.&nbsp;This puts Tesla in the top global EV manufacturer range but not as the leader. </p> 
<p>At the top is still the Chinese giant BYD, accounting for hybrid and fully electric vehicles.</p> 
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   <em>BYD e2 model is the only affordable EV so far in 2023, at $15,000. Image courtesy of Bloomberg</em>
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<p>As far as Tesla’s domestic competition,&nbsp; the closest is Rivian Automotive. The California-based startup also beat estimated car deliveries in Q2 at 12,640 vs. 11,000. Accordingly, Rivian (RIVN) stock surged by 11.5% on Monday. However, year-to-date, RIVN is nowhere near as performant as TSLA, at only 8.7%. </p> 
<p>The company received some boost after adopting <a href="https://tokenist.com/tesla-up-3-3-as-rivian-agrees-on-charging-standard/" rel="dofollow" class="deco-link">Tesla’s NACS charging solution</a>, but the company is still facing supply chain issues.&nbsp;In the short term, Rivian seeks to reach an annual 50,000 EVs target after receiving <a aria-label=" (opens in a new tab)" href="https://www.reuters.com/business/autos-transportation/rivian-receive-15-billion-incentive-package-new-georgia-assembly-plant-2022-05-02/" target="_blank" rel="noreferrer noopener nofollow" class="deco-link">$1.5 billion</a> in tax incentives from Georgia. </p> 
<p>By 2026, the company is expected to manufacture up to <a aria-label=" (opens in a new tab)" href="https://www.georgia.org/rivian" target="_blank" rel="noreferrer noopener nofollow" class="deco-link">400,000 EVs</a> annually.</p> 
<h3 id="tesla-s-future-valuation">Tesla’s Future Valuation</h3> 
<p>On Monday, Morgan Stanly released its update on Tesla’s forecast. Given the 4% delivery beat, the annual FY23 production estimate is closer to 1.9 million units than the current 1.82 million.&nbsp;</p> 
<p>Tesla’s price-cutting strategy seems to have worked, as it responded to the government’s tightening of federal <a href="https://www.tesla.com/support/incentives" target="_blank" aria-label=" (opens in a new tab)" rel="noreferrer noopener nofollow" class="deco-link">tax credit requirements</a>, having been reduced from $7,500 to $3,3750 (for Model 3 rear-wheel drive) in April.&nbsp;</p> 
<p>Despite the lower profits from <a href="https://tokenist.com/tesla-tumbles-3-in-premarket-after-sixth-price-cut-this-year/" rel="dofollow" class="deco-link">price cuts</a>, Morgan Stanley expects Tesla’s gross margin for FY23 to increase to 18.5% (from 18.4%) due to higher volume. The base TSLA price target remains at $250 per share.&nbsp;</p> 
<p>In the worst bear case, the target is $90 if the Tesla production volume is assumed to be at 5.5 million by 2030. Stanley’s bull case valuation is $450 if Tesla manages to up its production capacity to 10 million by the same year.</p> 
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<p><strong><em>Do you think Tesla will catch up with BYD’s aggressive EV pricing? Let us know in the comments below.</em></strong></p> 
<p>The post <a rel="nofollow" href="https://tokenist.com/tesla-rivian-soar-as-deliveries-higher-than-estimated-for-q2/">Tesla, Rivian Soar as Deliveries Higher than Estimated for Q2</a> appeared first on <a rel="nofollow" href="https://tokenist.com">Tokenist</a>.</p>

Tesla, Rivian Soar as Deliveries Higher than Estimated for Q2

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