Tesla Inc. reported second-quarter vehicle deliveries that far surpassed Wall Street’s modest expectations, posting a 25% increase in a slower-growing global market for plug-in cars. The Elon Musk-led company delivered 480,126 vehicles worldwide in the second quarter, trouncing the average of analyst estimates compiled by Bloomberg for fewer than 400,000.
Shares Slide Despite Strong Results
Despite the surprisingly positive result, Tesla’s shares tumbled after four consecutive days of gains prior to the announcement, including a roughly eight per cent advance on Monday. “Once the news actually arrived there just wasn’t as much left to get excited about,” said Haris Khurshid, chief investment officer at Chicago-based Karobaar Capital LP. Tesla’s shares fell 8.2 per cent as of 1:03 p.m. Thursday in New York, the most intraday in nearly a year.
Deliveries Beat BYD but Lag in Global Lead
The deliveries compare against a period when consumer backlash against Musk’s polarizing work for the Trump administration was dragging on Tesla’s brand. Although the company’s latest showing was the best it’s posted in the second quarter of any year, deliveries still fell short of China’s BYD Co., which retook the global lead with 557,090 fully electric car sales. “This was a much stronger than expected deliveries number, which we think was primarily driven by China and Europe,” said Garrett Nelson, an equity analyst with CFRA Research.
Focus Shifts to AI, Autonomy, and SpaceX Merger
While Tesla’s car sales are improving, many Musk watchers are looking past the company’s core EV business and toward the chief executive’s vision of turning artificial intelligence, autonomy and robotics into major revenue generators in the future. They’re also increasingly anticipating Musk potentially opting to merge the company with SpaceX, which staged a record initial public offering last month.
Capital Spending Surge and Energy Business Rebound
Maintaining a brisker pace of EV sales will be critical for Tesla as it takes a more spendthrift approach to capital expenditures. The company plans to shell out more than US$25 billion this year, roughly three times last year’s outlay, with Musk investing in Optimus humanoid robots and autonomous Cybercabs, among other initiatives. Tesla’s energy business also snapped back after a slow start to the year. The company deployed 13.5 gigawatt hours of storage products last quarter, up 53 per cent from the first three months of the year.
Model Lineup and Production Changes
Tesla now offers only three models to retail customers, with the popular Model Y sport utility vehicle and Model 3 sedan accounting for all but a sliver of sales. Demand for the Cybertruck has been disappointing, and deliveries would be even further off the mark without SpaceX, which has bought thousands of the pickups since late last year. Tesla stopped assembling Model S sedans and Model X SUVs in May, with Musk opting to convert space in the company’s Fremont, California, factory to produce Optimus robots. While Tesla expects to start scaling its Semi and Cybercab models this year, the truck is aimed at commercial customers and the latter is only just beginning to undergo testing on public roads.
