On Tuesday, Tesla reported a smaller-than-expected 5% drop in vehicle deliveries in the Q2, as the electric carmaker’s price cuts and incentives helped mitigate cooling demand. Tesla, world’s most valuable automaker’s stock had a rally of more than 10% on Tuesday. Tesla share price hit the highest level in nearly six months.
Tesla Q2 deliveries were higher-than-expected “greatly assuages concerns regarding softening EV demand,” CFRA Research analyst Garrett Nelson said.
Tesla stock price surge
As per Garrett Nelson, the Tesla stock price continues to ride a wave of positive momentum following its annual meeting in mid-June in which shareholders re-approved Elon Musk’s 2018 compensation plan.
Many feel that the Tesla shares rally and rebound and Q2 delivery figures were viewed by some analysts and investors as a sign of possible improvement ahead of its robotaxi reveal on Aug. 8. There are others who are worried that the EV maker is exhausting its “bag of tricks,” with Tesla going for price cuts and higher incentives.
Rise in Tesla’s Q2 deliveries
Tesla handed over 443,956 vehicles in the three months to June 30, 4.8% lower than a year earlier and up 14.8% from the preceding quarter.
Wall Street on average had expected the company to deliver 438,019 vehicles, according to 12 analysts polled by LSEG. Tesla delivered 422,405 Model 3 and Model Ys, and 21,551 units of other models, which include the Model S sedan, Cybertruck and Model X premium SUV. It produced 410,831 vehicles during the April-June period.
Tesla has been slow to refresh its car lineup at a time when rivals, especially in China, have come up with new affordable models, and as high interest rates dampen demand.
Investors supporting Musk’s pay package
Despite headwinds for its mainstay car business, investors overwhelmingly voted in favor of Musk’s record $56 billion pay package at the meeting. Board chair Robyn Denholm said prior to the vote that reinstating the pay package was necessary for “retaining Elon’s attention and motivating him.”
Musk said in a social media posting that Tuesday’s rally of Tesla stock is “small relative to vehicle autonomy and Optimus,” referring to his company’s self-driving cars and humanoid robots that he has said will significantly boost the EV maker’s market value once they become reality.
Tesla’s sales in China and U.S.
Tesla does not provide regional breakdown of sales, but some analysts said better-than-expected sales in China and the U.S. may have helped Tesla deliver stronger-than-expected results. In April, Tesla made another round of price cuts in key markets such as the United States, China and Europe.
Tesla offered loans with interest rates of zero or near zero percent on car purchases in China and the U.S. In the U.S. it heavily promoted its leasing plans, which make its vehicles eligible for $7,500 federal credits.
Chinese automakers said their sales grew by double-percentage points during the second quarter. BYD said its second-quarter sales of battery electric vehicles jumped 21% to 426,039.
Tesla’s China sales, which include domestic sales and exports to Europe and other countries, fell 17% in the second quarter from a year earlier. The company gave no breakdown on its China sales.
Tesla’s outlook
This marks the first time Tesla posted a year-on-year sales fall for a second consecutive quarter. Musk has said he expects the company to increase deliveries in 2024 from a year earlier. However, Wall Street largely expects a drop due to poor sentiment around EVs.
Tesla said in January that it expected “notably lower” growth in deliveries this year and dropped its goal of delivering 20 million vehicles a year by 2030.
Musk has promised to focus Tesla instead on self-driving cars, but some investors and experts remain skeptical that Tesla can perfect it anytime soon.
Tesla stock update
Tesla share was up 7.7% at a price of $226.11 on Tuesday afternoon. The stock have declined about 9% so far this year.
