By Michael Elkins
Shares of Tesla (NASDAQ:) are down 1.67% in pre-market trading, Thursday after Piper Sandler updated their 3Q delivery expectations for the company. Piper Sandler reiterated an Overweight rating on the stock but cut the price target to $340 ($360 previously).
The investment company addressed changes to their expectations in a note along with speaking on client concerns regarding Tesla’s positioning in China, given mid-August pricing noise.
Piper Sandler believes that consensus estimates are probably too high for 3Q deliveries and changed their estimate accordingly. Piper Sandler now expects 354k deliveries in the 3Q (down from ~380k previously). Their full-year estimate is unchanged at 1.36M units.
The updated 3Q estimate (of 354k units) implies Tesla can deliver about 140k units built in Fremont, 189k units built in Shanghai, and 25k units built in Berlin + Austin. An analyst said in a note that there is uncertainty with all three of these numbers, largely because of an unpredictable delivery surge in late-September, as well as a likely focus on exports (in Shanghai), not to mention an uncertain production trajectory in Tesla’s newest plants.
Recently, Piper Sandler has seen an up-tick in client questions regarding Tesla’s positioning in China. According to the analyst, there is no evidence of market share erosion in China. The analyst wrote in a note that “any changes are likely due to Tesla’s own build rates. Should market share begin falling, Tesla can easily emphasize exports and/or cut ASPs. Regardless, capacity underutilization in Shanghai seems unlikely.”
Tesla’s high-volume products, the Model 3 (sedan) and Model Y (SUV) remain among the best-selling vehicles in their respective classes. The Model Y, is #1 by a wide margin, representing ~14% of all luxury SUVs sold in China over the last 6 months. Any recent declines in the electric vehicle maker’s market share are likely due to production stoppages in Shanghai, as well as a subsequent surge in production rates.