Figure 1: Tesla’s car delivery numbers (quarterly basis). After a weak Q1 2019 (March 2019), the company delivered strong delivery numbers in Q2 and Q3 of this year.
Tesla’s share price has gone up ~11% from its low in October. The company recently reported strong car delivery numbers (see Figure 1 for Tesla’s quarterly car delivery numbers). The number of delivered cars is an important metric for Tesla, as it is a leading indicator for revenue. Cars that are delivered to consumers result in revenue in the following quarters. After a weak Q1 2019, the company delivered strong delivery numbers in Q2 and Q3 of this year (stay tuned for the earning release this upcoming week). Despite this positive trend, Tesla may face strong headwinds internationally:
- Weakening consumer demand in China. China is the largest electric car market in the world. Chinese consumers buy about 60% of all electric cars manufactured worldwide. However, faced with slowing economic growth, electric car sales in China has dropped 34.2% compared to the same period last year. This may affect Tesla’s sales in the country. Currently, the company generates about 13% of its revenue from sales in China (a number that was growing 50% year over year). A slowdown in sales in China can affect Tesla’s revenue.
- Tariffs from the trade war. Starting in December, China plans to impose a 25% tariff on US cars sold there. This may force Tesla to increase prices.
- Stronger Dollar. Between August to mid October, the Yuan exchange rate against the US dollar has weakened by ~7%. A stronger dollar means that Tesla’s car is more expensive in China.
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This article is meant to be informative and not to be taken as an investment advice, and may contain certain “forward-looking statements,” which may be identified by the use of such words as “believe,” “expect,” “anticipate,” “should,” “planned,” “estimated,” “potential” and other similar terms. Examples of forward-looking statements include, without limitation, estimates with respect to financial condition, market developments, and the success or lack of success of particular investments (and may include such words as “crash” or “collapse”). All are subject to various factors, including, without limitation, general and local economic conditions, changing levels of competition within certain industries and markets, changes in interest rates, changes in legislation or regulation, and other economic, competitive, governmental, regulatory and technological factors that could cause actual results to differ materially from projected results.
This video is meant to be informative and not to be taken as an investment advice and may contain certain “forward-looking statements” which may be identified by the use of such words as “believe”, “expect”, “anticipate”, “should”, “planned”, “estimated”, “potential” and other similar terms. Examples of forward-looking statements include, without limitation, estimates with respect to financial condition, market developments, and the success of or lack of success of particular investments (and may include such words as “crash” or “collapse”.) All are subject to various factors, including, without limitation, general and local economic conditions, changing levels of competition within certain industries and markets, changes in interest rates, changes in legislation or regulation, and other economic, competitive, governmental, regulatory and technological factors that could cause actual results to differ materially from projected results.