Tesla's Turbulent Week: Deliveries Miss, Recalls, and Discontinued Models

Tesla (TSLA) stock ended the week down 4% on Friday as the EV maker missed Wall Street estimates on its third-quarter deliveries, issued a recall, and discontinued a lower-priced model. The Elon Musk-led electric vehicle company faced a series of challenges that sent its shares on a rollercoaster ride, raising questions about its future growth and the viability of its ambitious plans.

Navigating Turbulence: Tesla's Challenges and Opportunities

Missed Delivery Targets and Investor Disappointment

Tesla delivered 462,890 EVs during the three months ended Sept. 30, falling just short of the 463,897 units Wall Street had expected. This marked the fourth consecutive quarter that the company has fallen short of analyst forecasts, disappointing investors and driving the stock down more than 3% following the report. The slight miss underscores the challenges Tesla faces in meeting the growing demand for its vehicles and maintaining its position as a market leader in the rapidly evolving electric vehicle industry.

Discontinuation of the Model 3 Standard Range Rear-Wheel Drive

Adding to the company's woes, Tesla quietly discontinued its cheapest EV model, the Model 3 Standard Range Rear-Wheel Drive. Wedbush's Dan Ives suggested that this move was aimed at removing Tesla's last shred of reliance on auto parts made in China, given the rising trade tensions between the United States and China. The discontinuation of this model, which had previously accounted for a significant portion of Tesla's sales, could further impact the company's ability to cater to a broader range of consumers and maintain its market share.

Cybertruck Recall and Safety Concerns

Tesla also issued its fifth recall for its Cybertruck this year, recalling over 27,000 of the silver, spaceship-esque electric pickups due to issues with their rearview cameras, which failed to comply with federal safety standards. This latest recall, coupled with the ongoing safety concerns surrounding Tesla's Autopilot feature, has raised questions about the company's commitment to safety and its ability to deliver reliable and roadworthy vehicles to its customers.

Talent Exodus and Heightened Competition

The rough week for Tesla comes as the company has faced a number of high-profile issues over the past year, including safety concerns, mass recalls, factory shutdowns, layoffs, and heightened competition in China. The departure of three senior Tesla executives this spring, and the recent announcement of the long-standing chief information officer, Nagesh Saldi, leaving the company, further underscores the challenges the EV maker is facing in retaining its top talent.

Robotaxi Event: A Pivotal Moment for Tesla's Future

Despite the recent setbacks, Tesla's upcoming robotaxi event has generated significant buzz and expectations among investors and analysts. Wedbush's Dan Ives believes that this event will be a "seminal and historical day for Musk and Tesla" and could mark a new chapter of growth around autonomous, full self-driving (FSD), and AI technology at the company. However, RBC analyst Tom Narayan cautions that the launch is unlikely to send Tesla stock soaring, as the company's vision for autonomous vehicles may take several years to become financially meaningful.

Diverging Analyst Perspectives: Bullish and Cautious Outlooks

The diverging analyst perspectives on Tesla's future highlight the uncertainty surrounding the company's path forward. While Wedbush's Ives remains bullish on Tesla, with a $300 price target, JPMorgan analysts have a more cautious outlook, giving the stock an Underperform rating. JPMorgan's concerns stem from the company's recent delivery numbers, which fell short of their earlier projections, as well as the potential barriers to mainstream acceptance of Tesla's self-driving vehicle dreams.As Tesla navigates these turbulent times, the company's ability to overcome its challenges and capitalize on its technological advancements will be crucial in determining its long-term success and the trajectory of its stock price. Investors and analysts will be closely watching the upcoming robotaxi event and the company's ability to execute on its ambitious plans for the future.