Barclays thinks electric-vehicle maker Tesla ‘s third-quarter production and delivery numbers will be under pressure before recovering in the final three months of 2023. “While 3Q TSLA deliveries will likely be modest relative to recent results, we suspect that they will be sufficient to draw down inventory amid what appears to be an even sharper slowing of production,” analyst Dan Levy wrote in a Friday note. Barclays expects Tesla deliveries for the third quarter to come out to 455,000 units, falling short of consensus expectations of 463,000 units and Barclays’ previous estimate of 483,000, according to the note. The firm’s delivery estimate is based on an inventory drawdown of 20,000 cars. Levy called these numbers a “clear step back” from 480,000 deliveries in the second quarter and in-line output of 441,000 deliveries in the first quarter. He noted this would be Tesla’s first sequential decline in production since the 2017 introduction of the Model 3 car, except for the quarters impacted by Covid-19 disruptions. Barclays also sees a “sharp step down” in September deliveries compared to June deliveries, as well as pressure in China and Europe, particularly as Shanghai begins to transition to the new Model 3 with longer driving range. While Levy said the latter changeover is an understandable source of weakness, he said the slowdown of Tesla’s new facilities is “somewhat concerning for their ramps in future periods.” Levy noted some of Tesla’s pricing measures that have helped offset weak demand in the previous quarter, such as higher discounting on U.S. inventory vehicles, significant price cuts on Model S and Model X cars in the U.S. as well as price cuts on some Model Y cars in China. But demand remains soft, he said. “We believe bulls will be eager to look past the 3Q result in favor of what is shaping up to be better 4Q,” Levy said, mentioning higher global Model 3 Highland sales and Cybertruck deliveries in the fourth quarter as potential catalysts for volume recovery. “Still, unanswered questions on the price elasticity of demand which TSLA faces could remain an overhang on the near-term setup, continuing to keep the majority of the TSLA bull case from here dependent on the eventual Model 2 and AI hopes,” the analyst said. Shares of Tesla have nearly doubled this year. The stock is down more than 5% for the quarter. TSLA YTD mountain Tesla stock.