Tesla could be on the verge of a strategic pivot

18 oct. 2023Wall Street analysts are focused on the company's gross margin levels after it implemented several price cuts, as well as any commentary on its outlook for demand in both the US and in China.

The EV maker already reported third-quarter deliveries of 435,059, which was below Wall Street expectations of 451,000 vehicles. Tesla said downtime at its factories in Shanghai and Dallas led to a slight decline in vehicle production during the quarter.

From an earnings perspective, here's what Wall Street expects from Tesla, according to data from Bloomberg:

Revenue: $24.9 billion

Adjusted earnings per share: $0.91 per share

Gross margins: 18.2%
Other items that will be on watch by investors is any update related to the company's planned launch of its Cybertruck, the impact its vehicle price cuts have had on demand, and the earnings potential of its EV charging network after it struck deals with a slew of automakers, among other things.

Our view is that Tesla could be in the midst of a strategic pivot from making cars to becoming a Tier 1 supplier. For Tesla's pivot, we see charging infrastructure, batteries, and drive units as being key in gaining access to OEMs as customers," RBC said in a recent note.

The bank highlighted that for Tesla to hit its 2023 delivery target of 1.8 million vehicles, it would have to deliver 476K units in the fourth-quarter.

"This would require production to quickly return to normal levels," RBC said.

RBC reiterated its "Outperform" rating and $305 price target, representing potential upside of 20% Spike.