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Will Tesla's Q4 Deliveries Drive Stock Price to New Highs?

Tesla's Moves on Christmas Eve

The Santa Claus rally kicked off with Tesla driving gains among the "Magnificent Seven" and leading the Nasdaq higher. On Tuesday, Tesla shares climbed 7.36%, extending Monday's rebound after last week's modest pullback. The stock has recorded a year-to-date increase of 86.04%.

Tesla's stock has been on a remarkable upward trajectory since Donald Trump's presidential victory, influenced by Elon Musk's strong support for the President-elect during the campaign. Before the U.S. presidential election, Tesla shares were down 2.3% for the year. However, since Election Day, they have surged by 90.36%, positioning the company to end 2024 on a high note. In less than two months, this electric vehicle manufacturer has impressively added approximately $705 billion to its market capitalization, bringing the total to nearly $1.5 trillion. This valuation accounts for half of the global auto sector's total market value and exceeds the combined market capitalization of the next 29 largest automakers.

The potential drivers behind Tuesday's stock price increase are as follows:

-Developments from China

According to CnEVPost, Tesla's insurance registrations in China reached 17,600 for the week of December 16 to 22, marking a slight decrease of about 5% from 18,500 the previous week. Despite this decline, registrations in the fourth quarter have risen 12% from the previous quarter and 13% year-over-year, serving as an indicator of strong delivery performance.

Additionally, reports demonstrated that Tesla's Model Y has sold out in China amid speculation that a revamped version will enter production in the first half of 2025. Tom Libby, an analyst at S&P Global Mobility, pointed out that the refresh of Model Y is expected to significantly impact Tesla's financial performance in 2025.

- Strategic Move by Hyundai

Hyundai has announced its decision to transition its electric vehicles to use Tesla's North American Charging Standard (NACS), providing free adapters to its customers starting in the first quarter of 2025. This move will give Hyundai EV owners access to 20,000 Superchargers across Canada and the U.S.

To date, Hyundai has already sold approximately 112,000 Ioniq EVs in the U.S., alongside an unspecified number of Konas. With Hyundai's EV sales up 77% in November and more than 50,000 units sold in 2024, this strategic shift could potentially add a significant number - at least 112,000 - of new users to Tesla's Supercharger network.

Upcoming Q4 Delivery

Investors are also paying close attention to Tesla's upcoming Q4 delivery report, expected on January 2nd. For 2024, Tesla deliveries are projected to reach about 1.81 million units, maintaining similar levels to 2023 but falling short of the company's implied targets. In its third-quarter earnings release, Tesla expected to achieve slight growth in vehicle deliveries for 2024, despite ongoing macroeconomic challenges. To meet this projection, Tesla needs to deliver 514,925 units in Q4, exceeding the previous record of 484,507 units set in Q4 2023.

According to FactSet, the analyst consensus forecasts 498,000 vehicle deliveries for Q4 and 1.79 million for 2024. Barclays, at the higher end of the consensus range, expects Tesla to deliver approximately 515,000 units in Q4.

Looking further ahead, CEO Elon Musk has indicated a potential delivery growth rate of 20% to 30% year-over-year in 2025.

Limited Impact on Stock?

While Tesla's Q4 deliveries are anticipated to reach record levels, Barclays analysts suggest that these figures may not significantly influence the stock's movement. The company's future growth appears to be more closely tied to the planned release of its low-cost model, expected in the first half of 2025. Short-term concerns regarding Q4 performance are likely to be outweighed by analysts' optimism about 2025 delivery projections.

Similarly, some other analysts caution investors that should be aware that Tesla's stock price is not always closely aligned with its fundamental metrics. They argue that Tesla's market success is driven more by "narrative momentum" than by its actual sales and profits. Contributing to high market sentiment are bullish views on Tesla's long-term strategies, such as the expansion of Full Self-Driving (FSD) technology and the development of autonomous vehicle production, including the launch of robotaxis. Furthermore, the appointment of Elon Musk by Donald Trump as a co-leader of the new Department of Government Efficiency also adds to the enthusiasm for Tesla. Trump administration's deregulatory stance favoring EV manufacturers has generated optimism about benefiting Tesla's operations and growth plans.

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