According to new data from Cross-Sell, Tesla saw a 13% drop in its third quarter vehicle registrations in California, building new skepticism about what its third quarter earnings will look like on Wednesday. This comes as General Motors will be launching its new all-electric super truck hummer on Tuesday night to compete with Elon Musk’s company. Yahoo Finance’s Rick Newman joins The Final Round with the latest details.
SEANA SMITH: Welcome back to "The Final Round." Third quarter earnings season is underway. And as we look ahead to tomorrow, a big report out and that's going to be Tesla. Shares under pressure today, off just around 2%. But of course, it's been a huge winner so far this year in 2020.
And Rick Newman, we know that Tesla delivered a record number of vehicles in the third quarter. I guess, the big question right now is, what do you think we're going to see? Is it going to report its fifth quarter in a row of profitability?
RICK NEWMAN: I don't know. That's a good question because of how weird the last few months have been. But I don't think investors care as much as they normally would about profitability in the next quarter. Because, let's remember, Tesla did not make the S&P 500. So that's been put on hold for a little while, so this one matters a little bit less than the last one did.
I think what investors are really looking ahead to is, is Tesla going to hit this target of 500 million units produced in 2020? And in order to do that, they do have to have kind of a monster quarter in the fourth quarter. So third quarter was about 139,000 vehicles. To get to half a million, they're going to have to produce about 182,000 in the fourth quarter. So that'll be a big jump over the third quarter.
And I think, you know, when they have the press call, I mean, I think this is what analysts are mostly going to be looking for. Are there signals? Will Elon Musk come right out and say, yes, we think we're going to make the target? No, we don't think we're going to make it. Will we have to try to interpret what he's saying? I think that's what everybody is going to be focused on for the most part tomorrow.
SEANA SMITH: You know, Rick, it's interesting because we know deliveries clearly has been a huge focus here for Tesla investors now for quite some time.
But when you take a look at some of the numbers, there was a story out today that vehicle registrations in California for Tesla vehicles dropped 13% in the third quarter compared to a year ago. And we know how important California is for Tesla. It's its biggest market here in the US in terms of states. How worrisome do you think-- I mean, should we read too much into that number?
RICK NEWMAN: I think it's the opposite. Since we already know what Tesla's third quarter production numbers were, I mean, to take this backward looking data about registrations in one state, I think it might actually suggest that California is becoming less important to Tesla.
And that would make sense. I mean, because, you know, it's getting a better foothold in Europe. It's getting a better foothold in China, both very important markets. And of course, you know, selling more vehicles in the rest of the United States.
So if Tesla can satisfy analysts with good production numbers in a quarter, even if registration in its home state of California are slipping, that might be good for Tesla. That might indicate its sort of installed base of vehicles is broadening.