These analysts have a bullish outlook for Tesla's Q3 deliveries. Here's why

Investing.com -- Shares in Tesla (NASDAQ:TSLA ) edged lower in premarket US trading on Wednesday after the electric vehicle (EV) giant's stock price advanced by 1.7% in the prior session.

Underpinning the uptick on Tuesday was a bullish outlook from analysts at Barclays for Tesla's third-quarter EV deliveries, which are due to be released in early October.  

In a note to clients, the Barclays analysts projected that EV deliveries would jump by 8% versus the year-ago period to roughly 470,000 units -- a figure that would top company-compiled consensus estimates of 461,000. 

Tesla reported second-quarter EV deliveries that were better than expected, and well above the number of vehicles produced, pointing to improved demand that may help ease concerns around excess inventory for its flagship Model 3/Y. Tesla's deliveries, a close approximate to sales, were 443,956 in the second quarter, above Wall Street estimates of around 438,000.

"Given the positive data points reported thus far in the quarter, particularly in China, we believe Tesla's sales trajectory is well understood and investors are expecting a stronger result," the analysts said.

They estimated that Tesla's third-quarter deliveries in China, the world's biggest automotive market and a key indicator of global EV demand, likely came in at around 179,000, which would set a quarterly record. The analysts said Tesla's returns in the country, where it has been engaged in an ongoing price war with domestic competitors like BYD (SZ:002594 ), has been "surprisingly robust."

"We assume the China strength is more a function of better macro/EV demand - yet it's also possible that incentives/pricing, or even some renewed interest ahead of the 2025 launch of [full self-driving technology, or FSD] may be aiding demand," they said.

The company has said that it plans to launch FSD in China early next year, pending regulatory approval. This was slightly later than earlier plans put forward by Chief Executive Elon Musk to unveil the technology by the end of this year.

Elsewhere on Tuesday, analysts at Piper Sandler raised their expectations for Tesla's third-quarter deliveries to 459,000 units, which would translate to growth of 5.4% versus the corresponding period last year. Strength in China and solid deliveries of Tesla's Cybertruck in the US are likely to offset weakness in Europe, the analysts noted.

Meanwhile, Piper Sandler sees full-year deliveries at roughly 1.75 million units, up by roughly 23,000 from its previous forecast.

They added that while these numbers will have a "material" impact on Tesla's annual earnings, the data will likely be "overshadowed" by Tesla's planned unveiling of its long-awaited robotaxi offering on Oct. 10.

Source: Investing.com