NEW YORK: When Tesla reports results for the third quarter after the bell on Wednesday (Oct 20), it will be the next three months, and whether Chief Executive Elon Musk can achieve the company's ambitious year-end goal, that analysts will be interested in.
The electric carmaker has stuck to its forecast of delivering half a million vehicles in 2020 despite a global pandemic and economic upheaval that has sunk most of its internal combustion rivals deep into the red.
That means Tesla must deliver more than 181,600 vehicles in the last three months of the year - a 30 per cent increase from record third quarter deliveries of 139,300 vehicles.
While several analysts believe that goal is attainable, others see a worsening macroeconomic environment ahead.
"I'm ... cautious about demand given the recessionary environment and accelerating pace of coronavirus infections, making it tough for the company to hit its 500K car sales target for the year," said Haris Anwar, senior analyst at investing.com.
Analysts on average expect Tesla to report net income of US$593 million in the third quarter on revenue of US$8.4 billion, according to Refinitiv data.
Several analysts, including Frank Schwope at Nord/LB, believe the positive numbers are due to regulatory credits - payments Tesla receives from other carmakers to offset their emissions.
Tesla Chief Financial Officer Zachary Kirkhorn said in July the carmaker expected credit revenue in 2020 to double from 2019 levels, but said that cash flow will eventually decline.
With recovery in the United States sluggish and Europe struggling with a second bout of the virus outbreak, Tesla analysts had pinned their hopes for growth on China, which has begun to recover as consumers shake off the pandemic's effects.
While Tesla does not break out regional sales, data from China's auto industry association CPCA showed Tesla Model 3 sedan sales remained roughly flat from July to September. Overall, Tesla sold a total of around 34,100 Shanghai-made Model 3s in the third quarter.
Third-quarter registration data from California, Tesla's largest US market, on Tuesday showed Tesla vehicle registrations dropped 13 per cent compared with last year.
Goldman Sachs analysts said in a note they hoped Tesla would provide investors with more details on Wednesday about the Chinese market and which countries compensated for lacklustre demand in the world's second-largest economy.
Tesla plans to ramp up production over the coming years by expanding output at its Shanghai plant to 250,000 vehicles a year, including its crossover Model Y.
It is also building new vehicle and battery factories near Berlin, Germany, and Austin, Texas.