Tesla’s stock launches skyward as Q2 EV deliveries surpass expectations

Tesla’s Q2 Delivery Performance

Quarterly Outcome vs. Analyst Expectations

In the second quarter, Tesla surpassed market forecasts for electric vehicle (EV) deliveries, signaling stronger-than-anticipated demand.

Year‑on‑Year Decline

Despite the quarterly uplift, the company experienced a second consecutive annual drop in overall deliveries.

Factors Contributing to the Decline

• Closure of a major German manufacturing facility, reducing production capacity.
• Supply chain interruptions impacting component availability.
• Ongoing regulatory and economic pressures in key markets.

Tesla Shares Surge 10% on Strong Q2 Delivery Numbers

On Tuesday, Tesla’s stock gained more than 10% after the company reported vehicle deliveries that exceeded analyst expectations for the second quarter, even though its sales continued to fall for the second consecutive year.

What Spurred the Rally

• Product deliveries outpace forecasts, providing a temporary boost to investor sentiment.
• A shrinkage in overall demand and a fiercely competitive market have dampened growth.
• The company’s focus on cheaper cars may counterbalance the slowdown.

Looking Ahead: Potential Growth Drivers

Within Tesla’s portfolio, the affordability of its new vehicle line and the expanding energy‑storage segment could be key to unlocking future expansion.

Tesla’s Q2 EV deliveries drop less than expected

Q2 Tesla Delivery Figures

Vehicle Deliveries

• Delivered 443,956 EVs, exceeding the Wall Street average estimate of 439,302.
• Numbers represent a 4.8 % decline from the same quarter last year.
• Followed an 8.5 % year‑on‑year drop in the first quarter.

Significance: These successive downturns mark the longest consecutive losing streak in quarterly deliveries since 2012.

Production Output

• Produced 410,831 cars in the second quarter.
• Production fell 14 % compared with the corresponding period a year earlier.
• Preceded by a 12.5 % annual decline in the first quarter.

Factors Influencing the Decline

Tesla cited a factory shutdown in Germany caused by arson, and shipment disruptions triggered by the Red Sea riot during the first quarter. Details regarding the slowdown in the second quarter were not disclosed.

Competitive Landscape

• Despite the drop, delivery numbers surpassed expectations, easing fears that the global EV leader could be overtaken by Chinese rival BYD.
• BYD reported a record 426,000 pure electric vehicles delivered on Monday, narrowing the gap with Tesla.
• BYD emerged as the largest EV seller in the final quarter of 2023, surpassing Tesla in overall deliveries.

Challenges of fierce competition in China

Tesla’s Market Challenges in China

China remains the second‑largest customer base for the electric‑vehicle titan, contributing more than 20% of its worldwide sales revenue. Yet the company’s expansion in the region is facing new hurdles.

Declining Shipments at the Shanghai Plant

• Data from the China Passenger Car Association (PCA) report a 24.2% drop in Tesla’s deliveries from the Shanghai Model 3 and Y production line during June, the fourth downward trend of the year.
• Year‑on‑year comparison shows a steady erosion of production capacity, underscoring the impact of slowing demand and intensifying local competition.

Government Subsidies Boost New‑Energy Vehicle Growth

• State‑backed incentives are nudging Chinese buyers toward new‑energy vehicles (NEVs).
  PCA forecasts a 28% year‑over‑year increase in NEV sales for June, signalling a shifting landscape.

Competition From Domestic Manufacturers

• Despite price reductions implemented since 2023, Tesla’s high‑end share is being displaced by more affordable electric and hybrid models offered by local rivals.
• BYD exemplifies this trend, launching frequent new models tailored to domestic consumer preferences and deploying technology upgrades that cut production costs.
  Pure EV sales for BYD rose by 13% year‑on‑year in the second quarter.
• Other competitors, such as Geely, reported a remarkable 41% sales increase year‑on‑year in the first half of 2024.

Key Takeaways

Tesla’s strategic priority in China will likely focus on expanding its product line to address the growing demand for mid‑price and affordable hybrids, as well as reinforcing supply chain resilience amid economic strain.
The company’s future performance will hinge on its ability to innovate in a market increasingly dominated by domestic leaders who are rapidly deploying cost‑effective, localized solutions.

Tesla remains the world’s most valuable EV maker

Key Highlights

Tesla retains its spot as the world’s leading electric‑vehicle manufacturer, boasting a market capitalization of $734.25 billion (€683.54 billion) as of Tuesday’s market close.

Share Performance

• Year‑to‑date, the company’s shares have dropped by 7.5 %.
• Since the first‑quarter earnings release, prices have climbed by 65 %, sparking renewed investor confidence.

Future Production Plans

• CEO Elon Musk announced a shift to accelerate mass production of affordable electric cars.
• Target launch window moved to the first half of 2025 rather than the second.

Industry Context

• Volkswagen plans billions of euros to bolster rival Rivian.
• In Europe, BYD is poised to challenge Tesla’s dominance as a top EV seller.

Operational Adjustments

• In April, Tesla announced a workforce reduction of more than 10 % globally due to a slower growth outlook and intensified price competition.

Energy Storage Growth

• First‑quarter revenue rose by 7 % to a record high of $1.64 billion (€1.53 billion).
• Energy deployments reached 4.1 GWh—the highest yet for the division.
• CEO Musk predicts sustained expansion in this sector.

Artificial‑Intelligence and Robotics

• AI training capacity has nearly doubled, setting a new company record.
• During the annual shareholder meeting, Musk asserted that the Optimus humanoid robot could elevate Tesla’s valuation toward the $25 trillion (€23.27 trillion) mark.
• He also forecasted that the weekly Cybertruck output could hit 1,300 units.