UBS sees Tesla missing market's Q2 delivery target by 25,000

In its Tesla (NASDAQ:TSLA) second-quarter deliveries preview note, UBS analysts predict the electric vehicle giant will fall short of market expectations for Q2 deliveries. 

They forecast around 420,000 deliveries, a 10% decrease year-over-year but a 9% increase from Q1. This revised estimate is below the 445,000 consensus on Visible Alpha and sits at the higher end of buy-side expectations, which UBS gauges at 410,000-425,000.

UBS highlights that "the stock tends to react more towards results vs. the headline (consensus) figure," suggesting the final delivery number might hold more weight than the initial miss. They plan to revisit their financial model after official figures are released.

Looking at specific regions, UBS expects deliveries in the US to be slightly below Q1's pace. However, they believe May's 0.99% financing offer for Model Y might have pulled some sales forward from June. An improvement in Model 3 deliveries is also expected due to resolved production challenges.

In Europe, deliveries are estimated to be down sharply year-over-year and quarter-over-quarter, primarily due to declining demand in key markets. China, however, is a bright spot, with deliveries showing a modest increase year-over-year and quarter-over-quarter.

Beyond deliveries, UBS cautions that gross margins might be impacted despite an expected improvement in US and China deliveries.

While the upcoming "Tesla AI Day" on August 8th might generate excitement around AI initiatives, UBS believes their financial impact is further out. The focus for the near-to-mid term will be on the new vehicle reveal, which could influence 2025 and 2026 estimates.

UBS expects the new vehicle to be distinct from the Model 3 and Y but with fewer features to achieve a lower price point.

UBS concludes by suggesting Tesla's stock price might diverge from current business fundamentals as investor focus shifts towards future growth and AI prospects.