The Elon Musk-led electric vehicle (EV) maker Tesla (TSLA) is delaying deliveries of some of its long-range models to customers in the U.S., according to a Reuters report.
Customers who ordered the Model Y can now expect to receive their cars in December, with the possibility of deliveries being delayed until March next year. Meanwhile, those who ordered the Model 3 can expect deliveries between September and December. Tesla expects to fulfill Model X orders coming in by February next year, with the wait possibly extending to May.
Tesla is the world’s leading electric car company and operates manufacturing hubs in the U.S., China, and Germany, where it recently opened the Giga Berlin plant.
What Is Causing Delivery Delays?
A shortage of components may be a reason for the delays. Tesla sources some of its car parts from suppliers in China, where recent COVID-19 lockdowns have disrupted production and shipments.
Tesla’s delivery delays may also be a function of overwhelmingly strong demand for the cars, which would mean booming business for the company. Perhaps Tesla’s decision to recall workers back to the office may be an attempt to try to address the high demand.
If Tesla is dealing with a surge in demand for its cars, then that could be good news for the stock. Meanwhile, Tesla shares have dropped sharply amid Musk’s Twitter (TWTR) buyout saga, implying that the stock can be picked up at a steep discount.
Wall Street’s Take
On June 1, Goldman Sachs analyst Mark Delaney reiterated a Buy rating on Tesla but lowered the price target from $1,200 to $1,000, which indicates 35% upside potential. The analyst lowered estimates for the U.S. auto sector across the board, citing supply chain challenges.
The Street is cautiously optimistic about TSLA stock with a Moderate Buy consensus rating, based on 14 Buys, 10 Holds, and six Sells. The average Tesla price forecast of $923.66 implies 24.76% upside potential to current levels. Shares have declined 38% year-to-date.
Stock Investors
TipRanks’ Stock Investors tool shows that investor sentiment is currently Positive on Tesla, with 2.4% of portfolios tracked by TipRanks increasing their exposure to TSLA stock over the past 30 days.
Key Takeaway for Investors
Even its competitors admit that Tesla runs its business well. Volkswagen (VWAGY) CEO, Herbert Diess, recently said that Tesla was moving twice as quickly as the rest of the industry. The Volkswagen chief also acknowledged that Elon’s auto company is highly focused. But does the high praise for the EV leader translate to better stock performance?
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