Canaccord Genuity (TSX:CF, LSE:CF) retained its positive view on Tesla Inc (NASDAQ:TSLA). reflecting on a double dose of news from the electric vehicle (EV) maker – worse than expected quarter three delivery numbers and its second annual AI day.
Starting with the delivery numbers, the broker pointed out that total deliveries grew to 343,830 units during the third quarter, a 35% increase compared to quarter two 2022 but below consensus forecasts of 363,000.
Total production grew to 365,923 units during the quarter, a 42% increase compared to the second quarter of 2022 with the Model 3/Y accounting for 95% of total production growing 43% sequentially. Deliveries of the Model 3/Y were 325,158, growing 36% sequentially.
READ: Elon Musk's Tesla Q3 production surges 40% but deliveries still below analyst expectations
Canaccord highlighted the discrepancy between production and deliveries with Tesla producing over 22,000 more vehicles than it delivered in the quarter, the largest difference over the last 15 quarters on an absolute basis, and the fourth largest on a percentage basis.
As for the AI day, the broker said this was a showcase of Tesla’s humanoid robot, Optimus, and the hardware and software development involved in bringing it to life.
The company also showcased the technology improvements underlying its full self-driving (FSD) rollout, including the neural network and silicon breakthroughs.
Most importantly, the broker felt it was a showcase of Tesla’s tech talent and expertise, attributes that underpin Canaccord’s view that Tesla is not an EV company, but a tech company that makes EVs.
The broker said it believes Tesla’s innovation curve is accelerating, a stark contrast to other large tech companies whose incremental product updates appear stagnant at best.
Canaccord pointed out that Optimus is an illustration of Tesla leveraging its existing technology and vertical integration by bringing to life its expertise in AI, software, hardware, manufacturing, and materials sciences.
The broker said by leveraging its existing technology (e.g. batteries, motors) and manufacturing capabilities, Tesla aims to ramp up production well into millions of units with a goal of a US$20,000 price tag.
This is well below comparatives with Tesla designing for mass affordability, it said.
The broker kept its buy rating and US$304 price target.
Tesla shares traded more than 7% lower Monday afternoon at $246.27.
Contact Jeremy at jeremy@proactiveinvestors.com