Tesla Q1 Deliveries Come In Under The Wire
Tesla managed to the hit the low end of recently and substantially reduced market estimates for Q1 deliveries at 310,048, still a nudge higher versus record Q4 results.
Tesla (TSLA) reported deliveries at 310,048 for the first quarter, up 68% y/y but up just 0.5% versus fourth quarter results.
This was roughly in-line with current expectations, but formerly enthusiastic market consensus has dropped in recent weeks after Tesla’s Shanghai factory faced several shutdowns as the burgeoning Covid outbreak in China drives cases to the highest levels since the pandemic began.
Results tracked the high end of my 300,000-310,000 estimate
which I had revised up a few weeks ago given the jump in EV appeal on spiking oil prices after Russia’s montrous attack on Ukraine (see Tesla China Deliveries: Weaker And More Important Than You Think, 3/14/22).
But the beat to my numbers came from higher than expected sales of long struggling Models S & X which came in at 14,724, a surprising jump verus 2,030 (down 83%) last year and the highest since 18,966 (down 3% y/y) in Q420. Models 3 & Y were lower versus my 298,000 estimate at 295,324 (up 62% y/y).
Results likely improved revenue quality via higher pricing and better mix, but profitability is less clear until we get results from deliveries in China for March.
China, as I have detailed before, is where Tesla has been generating virtually all its profits and cash flow (see Tesla China Deliveries: Weaker And More Important Than You Think, 3/14/22). Results through February were soft with Model 3 sales solidly lower and Model Y sales slowing:
Model 3 local deliveries in China fell more than 66% y/y in February to 4,607 following the 78% y/y drop in January to just 2,988. That put first two-month results at 7,595, down 72% y/y and the lowest versus the same period in any quarter since Q1 2020.
At this rate Model 3 China deliveries need to top 31,500 for March—a new monthly record—just to match peak quarterly results of 39,139 generated for Q4 2021 when buyers were rushing to buy before subsidies dropped. Yet even this would fall well short of market estimates targeting more than 41,000 for the quarter.
This again leaves all the heavy lifting for Model Y, which still is ramping up sales incrementally versus last year. Except Model Y came up comparatively short in February at 18,593. That was up 302% versus nascent results last year, but down 20% versus the second month in the fourth quarter—a sudden and significant slowing in sales momentum. As a result, Model Y first two-month results at 34,951 are down 4% versus the same period in the fourth quarter. This means monthly Model Y deliveries need to hit a new record at 41,969 for March so first quarter deliveries can even meet Q421 results at 76,920. Even so, this still would trail market estimates by more than 15,000.
Moreover, Tesla’s deliveries remained under increasing pressure from robust local rivals even before March deliveries were threatened by new Covid lockdowns across China.
Tesla China Deliveries: Weaker And More Important Than You Think, 3/14/22.
So pending data on March China sales, which should be reported in another week or so, I estimate first quarter revenue at $17.5 billion (up 68%) with EBITDA at $3.5 billion (20% margin, up 230 bps).
I don’t expect the market to wait for clarity about China—count on Tesla stock to jump on Monday.
Tesla will report first quarter results after the market closes on Wednesday, April 20th.
Stay tuned.
Tesla repurchased its 5.3% senior notes in the third quarter of 2021 as I projected, though I doubt we’ve seen the last of Tesla as a bond issuer:
Now stay tuned for the second step I described: a quickly shopped, likely $2-4 billion inordinately low coupon bond deal, rated now at low investment grade as I expected (see Tesla's Car Business Finally Turned A Profit. Really. Time For A Big Bond Deal). It could even be appealing... if it’s priced at T+100 bps or better.
Until then, I have Tesla: Not Rated.
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