Proactive Investors - Tesla Inc (NASDAQ:TSLA) first-quarter delivery numbers are expected to have increased to 420,000 when the company publishes this weekend, despite losing out in China to rival BYD.
Following the 439,701 electric vehicles produced and 405,278 delivered in the fourth quarter of 2022, the Elon Musk-run manufacturer has slashed prices in many markets, with cuts of as much as 20% to various models in the US, Europe and Asia.
Since the Model Y and Model 3 price cuts were implemented early this year demand has been "robust" during the quarter, said broker Wedbush in a note on Wednesday.
This has been led by the key China region, analysts said, even though figures showed the price cuts have led to the US company losing market share to Warren Buffet-backed BYD, which was among Chinese companies reacting by cutting their prices too.
Shenzhen-based BYD was reported to have sold more than five times the number of units that Tesla did in China in January and February, with its market share of plug-in hybrid and battery car sales increased to more than 40% from 34% a year earlier, while Tesla’s eased slightly to 7.8%.
However, Tesla should "at least hit the 420k bogey", said Wedbush analyst Dan Ives, referring to the Wall Street 'whisper number', and suggested that upside was possible depending on logistics around deliveries.
Some analysts, such as those at Barclays (LON:BARC), have pencilled in as much as 425,000.
Like Barclays, with the macroeconomic backdrop remaining uncertain, Ives expects more price cuts "around the edges" in the US and China over the coming months for Tesla to "further stimulate consumer demand".
Wedbush estimates 402,000 Model Y and Model 3 deliveries and 18,000 Model S/X this quarter, with the mix likely to be skewed on the upside for Model Y post price cuts in China and US.
"We believe given the scale and scope of Tesla's production capacity that margins will not be sacrificed at the expense of volumes in 1Q", the analyst said.
"While the China EV market is seeing a price war dynamic take place we believe Tesla has been aggressive and strategic about its Model Y/3 price actions which have paid major dividends so far this quarter around gaining market and mind share from domestic players."
He said the next big question is around margins and whether more big price cuts could be coming in the future for Tesla.
Based on current sales, Tesla is on pace for Musk's 1.8mln units delivery targets for 2023, he added.
China production is on a run rate of more than 1mln cars per year, with the analyst saying Musk and his team have "increased scale/scope" as they battle domestic EV competition and a price war begins in China.
Domestic players such as BYD, NIO Inc (NYSE:NIO), and Xpeng Inc (NYSE:NYSE:XPEV) are "very formidable competitors but ultimately we believe market share shifts are now favoring Tesla in China", Ives said.