Tesla analyst Gene Munster from Deepwater Asset Management named three headwinds that might affect the company’s return to growth.
On Wednesday, October 2, 2024, Tesla released its Q3 2024 delivery and deployments report. Tesla produced approximately 469,796 vehicles and delivered 462,890 units in the third quarter. It also reported deploying 6.9 GWh of energy storage products.
TSLA bull Gene Munster interpreted Tesla’s Q3 2024 delivery report as a return to growth for the company as deliveries were up by 7% year-over-year (you) in September.
“I was expecting a slight miss, predicting deliveries would be up 4% y/y (452k) due to the company facing triple demand headwinds. This is positive, as it marks a return to growth after being down 5% in June and 9% in March,” wrote Munster in a recent note.
Munster outlined three headwinds that may impact Tesla’s demand or sales.
The Macro
Munster refers to the macro viewpoint of Tesla as the auto industry grows to embrace electric vehicles (EVs) and the company’s market share lessens, particularly in the United States. Munster theorizes that Tesla’s US sales for September lagged compared to the rest of the world and “were up low single digits for the quarter.”
On the upside, he believes Tesla lost a fraction of its EV market share in the third quarter, adding that the company’s rate of decline is probably less than most investors expect.
“By 2030, I believe Tesla’s U.S. market share will be above 40%, compared to about 50% today, and well above most investors’ belief that market share will drop closer to 20%.”
EV Subsidies in Europe are Declining
Deepwater analyzed EV subsidies in Europe, looking at the United Kingdom, Germany, France, and Norway, which account for nearly 20% of total EV sales. The firm saw a decline of 35% in EV subsidies. When it excluded the UK, which is no longer part of the EU, the decrease in EV subsidies was 24%.
Elon Musk & Politics
Munster pointed out that Elon Musk’s political commentary has increased over the past few months, stating that it might present a headwind to sales.
“Given that consumers are hyper-sensitive about politics and more than half of Tesla’s buyers lean politically left, this dynamic may have reduced deliveries by 5-10k during the quarter. This suggests U.S. numbers would have been 4% higher, and overall numbers just under 2% higher if not for the political dynamic,” he stated.
What do you think of Munster’s analysis?
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