Tesla has produced an increase in EV production for the third quarter of calendar 2023, even though it fell below some market forecasts because of factory downtime as it re-gears production lines for the upgraded Model 3.
“In the third quarter, we produced over 430,000 vehicles and delivered over 435,000 vehicles,” the company said in a statement on Tuesday, US time. It produced 365,000 vehicles in the same quarter last year, but nearly 480,000 in the second quarter this year.
“A sequential decline in volumes was caused by planned downtimes for factory upgrades, as discussed on the most recent earnings call,” the company said. “Our 2023 volume target of around 1.8 million vehicles remains unchanged.”
Analysts had been expecting production numbers of around 465,000 for the quarter, and some – such as Morgan Stanley – had predicted annual production numbers of 1.86 million, with some – prompted by hints from CEO Elon Musk – suggesting up to two million for the year.
But analysts at Morgan Stanley is cautious about the growth of the EV market, particularly in the US, where it says the supply of EVs exceeds demand in key pockets.
It predicts production in 2024 to grow to nearly 2.5 million units, but says continued price cuts will slash Tesla’s operating margin to below 10 per cent in both the third and fourth quarters, compared to 10.5 per cent in the first quarter and 16.8 per cent for the 2022/23 calendar year that ended June 30.
Morgan Stanley says EV penetration may disappoint some investors in coming years, due to what it describes as the “hidden costs” of the transition.
It points too the lack of preparation for legacy car makers, who have yet to prove their viability of their EV production, signs of a fall in EV preferences, and “downstream” concerns including the cost of repairs from damaged vehicles, insurance and dealership issues.
“We anticipate the ‘friction costs’ around EV adoption to get greater amounts of attention through the end of the year,” it noted.
“Despite some ‘teething issues’ we note there are clear maintenance and cost of ownership advantages for EVs vs ICE (internal combustion vehicles), the Morgan Stanley analysts wrote.
“But only when the downstream service infrastructure can be adequately scaled to accommodate the initial rapid growth of the new electrical architectures.
Tesla is due to release its third quarter financial results on October 18, US time.
Giles Parkinson is founder and editor of The Driven, and also edits and founded the Renew Economy and One Step Off The Grid web sites. He has been a journalist for nearly 40 years, is a former business and deputy editor of the Australian Financial Review, and owns a Tesla Model 3.
Tesla starts rolling out EV charging signage across highways to accelerate EV awareness and adoption.
Popular family electric SUV from Geely gets a $2,000 leasing incentive to help drive sales.
MG's cheapest electric model now approved for sales with two battery packs in early 2026.
Tanya Shukla and Tim Eden from The Driven put Tesla’s Full Self-Driving (FSD) Supervised to…
Volkswagen announces arrival of new electric Transporter van in Australia, tapping into market for last…
Fortescue brings in Chinese supplier to help deliver the up to 400 giant 240-tonne electric…