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Tesla Stock Tumbles Amid Delivery Shortfall and Rising Competition

AInvestWednesday, Oct 2, 2024 6:30 pm ET
1min read

Tesla's recent market performance has been underwhelming, with shares dropping 3.49% on October 2, marking a two-day decline of 4.82%. The company's third-quarter delivery figures came in below expectations, as promotions and financing deals failed to entice enough buyers for its existing electric models. This has raised concerns of a potential annual delivery shortfall for the first time after years of rapid growth.

On Wednesday, Tesla reported delivering 462,890 vehicles from July to September, a 6.4% increase from the previous year but below the projected 469,828 by analysts. The company's struggle to meet expectations led to more than a 6% intraday drop in stock prices, eventually closing over 3% lower. This setback erased the year's gains, putting further pressure on future targets.

Despite CEO Elon Musk's assertion of an increase in deliveries next year, with a record 1.8 million cars delivered last year, achieving this seems increasingly challenging. For Tesla to avoid a decline in 2024, a record delivery of 516,344 units is required in the fourth quarter.

Tesla has been aggressive in cutting prices and offering incentives, such as insurance discounts and zero-interest financing, to counteract growing competitive pressures. These measures have not yet sufficiently stimulated demand amidst a global slowdown in electric vehicle sales.

The upcoming October 10 event, expected to focus on Tesla's autonomous driving technology, has been a recent point of interest among investors. The unveiling of the autonomous taxi could signal Tesla's pivot towards AI-driven innovation.

Regionally, Tesla is facing increased competition from both traditional and new automotive rivals. In China, competitors like Li Auto and XPeng are achieving record delivery numbers, while in the U.S., companies like Rivian and traditional giants such as GM and Ford are expanding their EV offerings.

Tesla's deployment of 6.9 GWh of energy storage systems in Q3 also represents a notable reduction from previous highs. The company is set to disclose its Q3 financial performance on October 23, a much-anticipated report that will provide further insights into its strategic direction.

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