- Title: Tesla investors to focus on demand issues in earnings report
- Date: 19th October 2022
- Summary: SHANGHAI, CHINA (FILE - JANUARY 7, 2020) (REUTERS) VARIOUS OF TESLA MODEL 3 VEHICLES ON DISPLAY HOUSTON, TEXAS, UNITED STATES (JULY 15, 2022) (Reuters) DRIVER FINISHING CHARGING HER TESLA RED TESLA HOOD WITH TESLA LOGO TESLA CHARGING STATION CHARGING HANDLE INSERTED INTO VEHICLE
- Embargoed: 2nd November 2022 15:16
- Keywords: Musk Tesla Twitter earnings
- Location: VARIOUS
- City: VARIOUS
- Country: US
- Topics: Company News Markets,Economic Events,United States
- Reuters ID: LVA003334719102022RP1
- Aspect Ratio: 16:9
- Story Text: Tesla Inc.'s quarterly report on Wednesday (October 19) will likely show whether the Elon Musk-led electric-vehicle maker is facing any weakness in demand that is starting to weigh on the wider auto industry.
Decades-high inflation, rising energy bills in Europe and signs of a weakening China market have raised doubts among some analysts about whether Tesla can buck an economic slowdown and continue to raise prices without hurting its sales.
Although Musk has said Tesla "does not have a demand problem", the company's latest report on deliveries showed that it made 22,000 more EVs than it delivered to customers in the third quarter.
It blamed the rise in inventory on transportation-related problems.
Demand for Tesla vehicles in China, the world's biggest market for autos, is emerging as a major worry among Wall Street analysts, given that the EV maker faces tough competition from domestic rivals BYD, Nio Inc., and XPeng Inc.
Globally, there are fears that auto sales may lose steam in the coming quarters as rising interest rates and a weaker economic backdrop discourage consumers from making big-ticket purchases.
Analysts say pricing is a key factor that could help Tesla make up for a possible demand drop and boost revenue.
The average U.S. selling price of Tesla's Model 3 has risen about 24% since January last year, potentially helping the EV maker rake in record revenue in the third quarter.
Wells Fargo said Tesla is likely the biggest beneficiary of the Biden administration's new consumer tax credits to incentivize North American battery and EV production.
Musk also raised hopes of a share buyback earlier this month when he said "Noted" on Twitter in response to a major individual investor's call for a stock buyback.
Such a move could benefit Musk, whose 15% stake in Tesla makes him its biggest stakeholder, and help him raise cash to fund his $44 billion deal to take Twitter Inc. private.
Some experts say Musk may need to sell up to an extra $3 billion in stock after the earnings announcement to help fund the deal.
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