Tesla's (NASDAQ:TSLA) Q3 deliveries are projected to be in line with market expectations, according to analysts at Wolfe Research, with around 460,000 vehicles expected to be delivered—a 6% year-over-year increase and 4% higher than in Q2.
The figure, suggested in the firm's Q3 deliveries preview note, is largely in line with the consensus estimate of 461,000.
The firm explains that the regional breakdown suggests flat deliveries in North America, with China poised to deliver a record 172,000 vehicles, offsetting lower volumes in Europe.
While deliveries are expected to be steady, analysts highlight concerns over profitability.
In Q2, Tesla's auto gross margins, excluding credits, dropped to 14.6%, largely due to cost reductions that failed to offset price cuts on the Model Y. For Q3, Tesla stepped up incentives, particularly in the U.S., which could lead to a $4,500 per vehicle pricing headwind.
Analysts estimate this could reduce global revenue per unit by $550 and total price reductions by $1,000 per vehicle.
Despite the pricing pressure, Tesla's cost reductions are expected to continue. Since late 2022, the company has reduced its cost of goods sold (COGS) by about $800-$900 per vehicle per quarter.
Analysts project Tesla could see a modest improvement in gross margins, rising to 15.2% in Q3, with some help from lower Cybertruck losses and deferred revenue recognition.
Looking ahead, analysts said: "In the interim, TSLA will be hosting its much-anticipated Robotaxi event on October 10. We continue to view the
run-up to this event as a potential near-term positive catalyst for stock."
Analysts also expect the launch of Tesla's lower-cost model in early 2025 to play a key role in mitigating future pricing pressures and filling out production capacity.