Tesla’s Growth Story Fades as Analysts Downgrade Delivery Estimates for Q1 2024
Tesla’s stock has been one of the worst-performing in the S&P500 this year, and analysts are attributing this to the automaker’s fading growth story. Although Tesla has been growing at a rate of around 50% annually in vehicle sales until last year, it has warned that its growth rate will slow this year, leaving Wall Street struggling to adjust to this new situation.
Tesla’s vehicle deliveries reached a record high of 484,507 in Q4 2023, up 20% year-over-year. However, analysts are finding it challenging to estimate the number of deliveries for Q1 2024, with only a few weeks left in the quarter. Initially, the consensus was 479,400 units, slightly down quarter-to-quarter but significantly up year-over-year. However, recent downgrades have resulted in more pessimistic estimates.
Deutsche Bank now predicts 427,000 deliveries in Q1 2024, a significant decrease from the original consensus. Other firms, such as UBS, have also lowered their estimates, with the latter now predicting 432,000 units, down from its initial estimate of 466,000 units. Several other firms have made similar downgrades, with most estimates now placing Tesla’s deliveries in Q1 between 425,000 and 435,000 units.
Tesla is expected to release its production and delivery numbers in the first few days of April, but some analysts have already lowered their expectations for the quarter. The automaker’s growth may be notably lower than the rate achieved in 2023, leaving many to wonder when Tesla will return to significant growth.
Is Tesla’s growth story dissipating for the next few years? It appears that way, as Tesla is not expected to return to significant growth until 2027 based on its own estimates. Tesla’s resources could have been better spent on a higher volume vehicle to shorten the time between growth phases. However, it remains to be seen whether the recent lower estimates for Q1 2024 make sense, given Tesla’s lower production at Gigafactory Shanghai due to the Chinese New Year and the shutdown at Gigafactory Berlin due to the arson attack. The demand side also shows Tesla offering significant discounts to sell everything it has, as usual.
This is a real challenge for Tesla, as the automaker is currently between two waves of growth with no clear path back to significant growth in the near term. Analysts have been struggling to come up with new numbers for this year, as Tesla has not provided clear guidance. The next few months will be crucial for Tesla, as it strives to return to significant growth and regain investor confidence.
