Tesla flags weaker delivery outlook as analysts forecast second year of sales decline

Tesla put analyst predictions for its car deliveries up on its website, and the numbers don’t look great. At the same time, a big supplier just revealed that its battery contract with the carmaker got slashed by almost everything.

According to what Tesla posted, analysts think the company will deliver around 422,850 cars between October and December. That’s down 15% from the same time last year. Bloomberg’s own count of what analysts expect is a bit higher at 445,061 vehicles, but that’s still a 10% drop.

Tesla’s investor relations team has been tracking these predictions for years now, but this is the first time they’ve actually put the numbers out there for everyone to see on their website.

Second year of declining sales expected

Things aren’t looking up for the year either. The company is on track for its second year in a row of declining sales. Analysts figure Tesla will deliver about 1.6 million vehicles total this year, which is over 8% less than last year.

Sales took a hit early this year when Tesla had to shut down production at its plants to retool the lines for the redesigned Model Y. That’s their most popular car. Around that same time, CEO Elon Musk got involved with the Trump administration, which stirred up plenty of controversy.

Third quarter was actually a bright spot. Deliveries jumped to a record high as U.S. buyers rushed to get electric vehicles before the $7,500 federal tax credits went away at the end of September.

When those incentives disappeared at the start of this quarter, Tesla tried to soften the blow by rolling out stripped-down versions of the Model Y SUV and Model 3 sedan. Both came in under $40,000.

Even with sales dropping, Tesla’s stock is still up for the year. Shares climbed 14% through Monday, though that trails the S&P 500’s 17% gain.

Massive battery supply contract collapses

On another front, there’s trouble with a supplier. L&F Co., a South Korean company, made an announcement Monday about a contract with Tesla that pretty much disappeared. The deal was originally worth 3.83 trillion won, which comes out to $2.67 billion. It got reduced to 9.73 million won. That’s a 99% cut. The company’s filing blamed it on supply quantity changes.

What went wrong? The Cybertruck kept getting pushed back, so hardly any material ended up being delivered. Customers were going for other Tesla vehicles, the Model 3 and Model Y mostly. There were other factors at play too. The elimination of Inflation Reduction Act subsidies was one of them.

L&F released a statement. They said the revision couldn’t be helped because of shifts in the global EV market and how battery supplies work. Their main high-nickel product shipments haven’t been affected, they noted. Deliveries to big Korean battery cell manufacturers are continuing as normal.

The company supplies others besides Tesla. LG Energy Solution is one of them. L&F’s stock took an 11% hit in Seoul trading Tuesday. For the year, shares are up around 16%. That looks small next to the Kospi Index, which jumped 76%.

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