Electric vehicle giant Tesla Inc. is expected to report its fourth-quarter deliveries this week. However, according to Gene Munster, a market expert from Deepwater Asset Management, the company’s deliveries may be weaker than the consensus estimates.
Key Points to Consider
- Tesla’s fourth-quarter deliveries are expected to be around 415,000, which is a 16% drop from the previous year.
- This estimate is also shy of the consensus Street estimate of around 449,000.
- The company reported record deliveries of 497,099 in the third quarter, which was boosted by the U.S. federal tax credit expiring on September 30.
Q4 Deliveries On Deck
Tesla’s fourth-quarter deliveries will be closely watched by investors, as they will provide insight into the company’s performance during the quarter. Munster’s estimate of 415,000 deliveries takes into account the impact of the tax credit expiration, which is expected to result in a larger-than-expected drop in deliveries.
Market Share Gain Possible
Despite the potential drop in deliveries, Tesla may still gain market share in the fourth quarter. According to a Cox Automotive estimate, U.S. electric vehicle sales are expected to be down 30% year-over-year for the quarter. If Tesla’s deliveries are down 16%, it could indicate a share gain against other struggling peers.
Focus on AI Business
Munster believes that investors will look past any delivery miss and focus on Tesla’s AI and robotaxi segments. The company’s AI business is expected to be a key driver of growth, with Munster predicting that Tesla can grow its deliveries by 15% or more annually.
Investor Expectations
Investor expectations for Tesla’s deliveries have declined, with a greater emphasis being placed on the company’s AI business. Munster believes that Tesla’s shares have outperformed the Nasdaq over the last six months and that the company’s market capitalization of $1.6 trillion reflects a sum-of-the-parts premium relative to just the automotive business.
Future Outlook
Munster predicts that Tesla’s deliveries will be flat to up 5% year-over-year in 2026, which is below the Street consensus estimate of 13% year-over-year growth. However, he believes that the company can grow its deliveries by 15% or more annually, especially as competitors limit their exposure to the EV sector.