Tesla Q1 deliveries are expected to exceed expectations
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Barclays Senior Autos Analyst Dan Levy spoke with Yahoo Finance, highlighting Tesla's cost advantage and the role of Elon Musk in the company's success.
According to Levy, Tesla's first-quarter delivery figures are expected to exceed expectations, with a forecast of 425,000 units, ahead of the consensus of 420,000 units. This positive outlook could catalyze the stock, which has recently faced negative sentiment due to questions about demand.
The Elon Factor: How Musk's Persona Affects Tesla's Branding
Levy addressed the potential impact of Elon Musk's public persona on Tesla's overall branding. While a recent poll indicated that 36% of Americans said Elon Musk makes them less likely to buy a Tesla, Levy stressed the importance of focusing on Tesla's product and cost lead rather than Musk's persona.
Levy acknowledged that Tesla wouldn't have achieved its current status without Musk's guidance and that his unorthodox approach has contributed to the company's success. He also highlighted the investor day event, where 17 people appeared on stage alongside Musk to showcase the depth of Tesla's bench and demonstrate that there is more to Tesla than its CEO.
Tesla's Cost Advantage, A Key to Unlocking Further Volume
Levy emphasized Tesla's significant cost advantage in the electric vehicle (EV) market, which he believes the company will use to unlock further volume by leaning into its margin advantage. He referred to Tesla's investor day, where the company expressed its intention to drive costs down and, in turn, unlock more volume.
This cost advantage is crucial for Tesla as it faces challenges common to other automakers in the EV market, such as ramping up volume and maintaining healthy margins. Levy noted that Tesla's cost advantage allows them to be more competitive and flexible in its pricing strategies, which will be essential for driving future growth.
Expectations of Further Price Cuts Amid Economic Pressures
As the global economy faces various pressures, Tesla is expected to make additional price cuts to remain competitive. Levy pointed out that the US auto industry's pricing is coming down from all-time highs, and Tesla is subject to the same dynamics. Furthermore, Tesla's new facilities in Austin and Berlin will increase supply, potentially leading to further price reductions.
However, Levy also mentioned that there might be some margin offset due to additional fixed cost absorption and moderating raw material costs. This, combined with Tesla's cost advantage, should help the company navigate the economic pressures and continue its growth trajectory.
A Clear Lead in EV Profitability
Tesla's first-mover advantage has given it a clear lead in EV profitability, with a 17% Earnings Before Interest and Taxes (EBIT) margin last year. Levy compared this to traditional automakers like Ford, which reported -40% EBIT margins on their EVs. This profitability gap demonstrates traditional automakers' challenges in transitioning to EVs and highlights Tesla's strong position in the market.
Tesla's strong Q1 delivery forecast, cost advantage, and a clear lead in EV profitability indicate a bright future for the company. Despite the potential impact of Elon Musk's persona, Tesla's focus on product quality and cost reduction should continue to drive growth and maintain its position as a leader in the EV market.
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Tesla has begun to reach out to customers in the United States and is offering demo drives of the Cybertruck on an invite-only basis. @brandonhd on X shared the first invite image, and it looks like it's going out quite quickly to multiple locations that have Cybertrucks on display.
Up until now, display vehicles have been for just that – looking, but no touching. Some Tesla delivery centers and showrooms have also allowed viewers to take a seat inside and open it up, but most are still locked away behind the velvet rope.
It’s exciting to see that Tesla has begun to demo them – and it can only be so long until demo drives open up to everyone.
Advisor-led Demo
This Demo Drive is led by a Tesla Advisor – while you’re driving, the advisor will be in the passenger seat, walking you through the experience. They’ll explain steer-by-wire, off-road controls, and will introduce new-to-Tesla buyers to all the features that are currently available.
The list of locations so far for demo drives appears to be fairly limited, but we will hopefully see demo drives roll out throughout the United States, and eventually Canada too. Here is the current list of city/state locations that have seen demo drive invites.
Actually Smart Summon, the successor to Tesla’s Smart Summon feature, has been confirmed to be coming as soon as next month as per Elon Musk. Colloquially known as “ASS”, Actually Smart Summon is supposed to improve on the regular Smart Summon capabilities, which have historically used ultrasonic sensors (USS) to navigate parking lots.
We’re looking forward to Actually Smart Summon, and we’re quite excited about what other features will be unlocked once it finally shows up at our doorstep.
Vision-based Improvements
ASS is supposed to bring Smart Summon to vehicles that don’t have USS – using Tesla Vision. Most recently, Tesla has brought Autopark to vehicles without USS, and Vision-based Autopark has been a huge success. It is faster, more reliable, and smoother than the older USS-based solution. It can also park and maneuver in tighter locations.
Today, Smart Summon is sometimes useful at best, usually a party trick, or downright dangerous at worst. It’s excellent and best used in straight lines, where you have a clear line of sight of the vehicle, and can stop it if doesn’t see an obstacle.
I used Smart Summon today, just before writing this article – my 2022 Model Y (with USS) – did manage to show up just fine – in a straight-line location from where I was parked, after exiting the parking spot fairly cleanly. However, I’ve previously used Smart Summon and have had the vehicle turn towards obstacles, such as cart returns or curbs. Overall, it’s a sometimes-useful feature that has a lot of drawbacks right now.
Smart Summon is also restricted to a certain distance – and it's pretty small. The max distance is shorter than most parking lots, being only about 215 ft (65m). If you’re lucky enough to park close, it's very useful to bring your car right to you.
Actually Smart Summon
ASS will bring FSD V12-like capabilities to Smart Summon – the vehicle will primarily use Vision to drive toward you (or the location you’ve indicated). ASS has been supposed to be coming since about September 2022 and has seen many delays – we’re almost at the 2-year point today.
We’re looking forward to Actually Smart Summon being able to bring the vehicle – safely – right to you. ASS is also one of the key steps towards bringing some other cool features that Elon Musk has previously mentioned – Park Seek and Banish Autopark.
We’re also hopeful that Actually Smart Summon will increase the maximum range a vehicle can be summoned, because the current range is fairly small. Alongside Park Seek and Banish Autopark, we’re closing in on a Robotaxi-based future.
Park Seek and Banish Autopark
When the FSD v12.4 showed up, Elon also mentioned that going forward, vehicles would automatically park themselves when arriving in a parking lot – Park Seek – and that if you got out of the car at the entrance to a business, you could get it to automatically park itself in the parking lot – Banish Autopark. These are two features that are needed for Robotaxi to work – which itself is delayed to October 10th of this year. We’re looking quite forward to them – as in combination with Actually Smart Summon, Tesla has reached the cusp of vehicle autonomy.
A vehicle that arrives, driverless, at the location you’re at, then drives somewhere, parks itself there, and waits for you – is the definition of a Robotaxi.
While we’re likely to have to wait for Banish Autopark and Park Seek just a bit longer, Actually Smart Summon being around the corner is exciting! Gone will be the days of having to run out to your car when you forgot your umbrella – your car will just come right to you instead.
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