Tesla Shares Surge Following Impressive Q2 Deliveries Report.

Tesla Shares Surge Following Impressive Q2 Deliveries Report

KEY POINTS : Tesla has released its second-quarter vehicle production and deliveries report for 2024, revealing that it produced 410,831 vehicles and delivered 443,956. Deliveries, which are the closest approximation of sales provided by the electric vehicle maker, exceeded Wall Street estimates. However, the total number of deliveries was down 4.8% compared to the same period last year.

Tesla shares surged on Tuesday after the company announced second-quarter vehicle production and delivery numbers that exceeded analyst expectations.

Key figures from Q2 2024 include:

- Total deliveries: 443,956 vehicles

- Total production: 410,831 vehicles

Analysts had predicted Tesla would deliver 439,000 vehicles in the three months ending June 30, according to FactSet StreetAccount's consensus estimates. Although the total deliveries in Q2 were down 4.8% from 466,140 a year earlier, they increased by 14.8% compared to the first quarter.

As a result, Tesla's stock climbed more than 9% in midday trading on Tuesday. Prior to this report, Tesla shares had fallen 16% in 2024.

Deliveries are the closest metric to sales that Tesla discloses. The company groups deliveries into two categories—Model 3 and Model Y vehicles, and all other vehicles—without breaking down numbers for individual models or specific regions.

Tesla’s current lineup features its popular Model Y crossover utility vehicles, Model 3 sedans, the new Cybertruck pickups, the Model X SUV, and the flagship Model S sedan.

In April, Tesla reported an 8.5% drop in first-quarter deliveries, totaling 386,810 units. This marked the first annual decline since 2020. A few weeks later, the company announced a 13% year-over-year revenue decline for the quarter, attributing it primarily to a lower average selling price.

Sluggish sales were partly due to temporary factory shutdowns following an alleged arson attack at Tesla’s factory in Germany and shipping delays caused by conflicts in the Red Sea, according to the company.

New Tesla vehicles parked outside the Tilburg Factory & Delivery Center in Tilburg.

However, the decline in sales also coincides with Tesla’s aging vehicle lineup, increased competition from other EV makers, especially in China, and brand erosion, which a recent survey partly attributed to CEO Elon Musk’s “antics” and “political rants.”

To stimulate sales, Tesla has introduced various discounts and incentives this year.

In China, Tesla is currently offering a zero-interest loan as an incentive for customers to purchase a Model 3 or Model Y by July 31. According to its 2023 annual filing, Tesla generated approximately $21.75 billion in revenue from China, representing 22.5% of its total sales.

Colin Langan, an analyst at Wells Fargo, issued a report on Monday stating that the firm anticipates “declining delivery growth driven by lower demand & diminished return on price cuts.” He recommends selling Tesla shares.

Wells Fargo expects Tesla’s automotive gross margins, excluding environmental credits, to fall due to the “likelihood of more price cuts & lower volumes” as the year progresses.

Investor attention will now turn to Tesla’s second-quarter earnings report later this month and a separate marketing event in August, during which the company plans to unveil its design for a dedicated robotaxi, or “CyberCab.”