Tesla soared more than 10% intraday! Q2 delivered 444,000 new cars, better than the market's pessimistic forecast

On July 2nd, Tesla announced its delivery data, showing that the company delivered a total of 444,000 new cars in Q2, a year-on-year decrease of 4.8%. This marks the second consecutive quarter of year-on-year decline, but it exceeded market expectations of 439,000 cars. The total production in Q2 was approximately 411,000 cars. This news boosted Tesla's stock by over 10% during Tuesday's trading session, potentially leading to the sixth consecutive trading day of gains for Tesla. Additionally, the better-than-expected delivery volume helped Tesla maintain its position as the top-selling electric vehicle globally, surpassing its competitor BYD at one point.

Year-on-Year Decline in Deliveries, Energy Storage Products Show Promise

Over the past year and a half, Musk has ordered price cuts across the entire Tesla lineup, but these measures have not been sufficient to sustain momentum. Data shows that Tesla delivered 422,405 of its best-selling Model 3 and Model Y vehicles in the second quarter, lower than the 446,915 units delivered a year ago.

At the same time, Tesla has not provided detailed information on the sales of the Cybertruck. Two previous recall incidents indicated that Tesla had delivered over 11,000 Cybertrucks to customers. During the annual shareholder meeting last month, Musk mentioned that the company produced 1,300 Cybertrucks in a week, but did not specify the exact timeline or whether this production pace would be maintained.

Reports indicate that Tesla produced 410,831 vehicles in the second quarter, a 14% decrease compared to the same period last year. Tesla did not explain the reasons for the decline in sales and production, but is expected to provide detailed explanations when announcing its second-quarter performance on July 23.

Tesla CEO Elon Musk announced significant layoffs in April, leading to internal reductions of up to 20% of the workforce. Analysts believe that these layoffs may have impacted delivery data. Moreover, the production of Tesla's first new model in years, the Cybertruck, has been slow. Tesla attributed the slowdown in the first quarter to a suspected arson attack near its factory in Berlin and the redirection of shipping routes. However, despite fewer external disruptions in the second quarter, the company faced challenges in growth due to aging models.

Tesla also stated that it deployed 9.4 GWh of energy storage products in the second quarter, setting a new record for single-quarter deployments, surpassing the 4,053 MWh in the first quarter. This indicates that the company has almost reached the total energy storage product deployments of last year in the first half of 2024. Analysts believe that energy storage products have brought a glimmer of hope to Tesla amidst declining car sales, but the challenge lies in translating this growth into meaningful revenue.

Boosted by deliveries exceeding expectations, Tesla's stock price surged by over 10% during Monday's trading session, before narrowing to 8.87% and closing at $228.47. Since the beginning of this month, Tesla has accumulated a rebound of approximately 19%, with gains in the past five trading days. However, slowing growth and decreasing profit expectations have put pressure on investor sentimentTesla's stock price has fallen by 15% this year, while the S&P 500 index has risen by about 15%.

Sales in China and the U.S. Exceed Expectations, Weakness in Europe

Although Tesla did not provide sales breakdown by region, analysts say that sales in China and the U.S. have exceeded expectations, helping Tesla achieve strong results.

Ken Mahoney, CEO of Mahoney Asset Management, said, "Seeing improvements in domestic sales in the U.S. and China compared to their struggles in the first quarter of this year is very positive."

Furthermore, Chinese electric car manufacturers performed well in the second quarter. BYD reported a 21% surge in electric vehicle sales in the second quarter, reaching 426,039 vehicles. Meanwhile, Nio and Li Auto reported that vehicle delivery data for June increased year-on-year.

Tesla's sales in China, including domestic sales and exports to Europe and other regions, declined by 17% in the second quarter compared to the same period last year, but better than expected. Tesla did not provide detailed data on its domestic sales in China.

Sales of Tesla in Europe were particularly weak, with a 36% decline in May, mainly due to reduced electric vehicle subsidies and weak demand from fleet operators, which accounted for nearly half of sales in the region last year.

Divergent Views on Wall Street, Fundamentals Still a Concern

Wall Street analysts have divergent views on Tesla's future. Some analysts point out that Tesla's fundamentals are still a concern.

Garrett Nelson, Vice President and Senior Equity Analyst at CFRA Research, said that the better-than-expected delivery volume "greatly alleviated concerns about weak demand for electric vehicles. Following shareholder reapproval of Musk's 2018 compensation plan at the mid-June annual meeting, Tesla's stock continued to ride positive momentum."

Adam Jonas, a long-term Tesla bull analyst at Morgan Stanley, believes that as AI data centers are being built across the U.S., the U.S. power grid will bear a huge load, and Tesla's energy business is expected to meet the demand, becoming a key market participant. The firm maintains an overweight rating on Tesla and raises the target price to $310.

However, Colin Langan, an analyst at UBS, released a report on Monday stating that the company believes "declining demand and reduced price cuts will lead to a decrease in delivery growth." He recommends selling Tesla stock, expecting Tesla's car gross margin to decline as "there is a high likelihood of price cuts and reduced sales volume this year."

Analysts believe that although Tesla still dominates electric car sales in the U.S., its lead is narrowing. According to data from Motor Intelligence, Tesla accounted for nearly half of U.S. electric car sales in May, down from about 60% in the same period last year. U.S. car sales for the first half of this year are expected to be roughly flat compared to last year, as the industry continues to face high rates pushing up monthly paymentsTesla is not the only manufacturer facing a slowdown in the electric vehicle market. From traditional giant Ford to emerging Rivian, both have warned that the demand for electric vehicles in the United States is weak, and consumers' enthusiasm for abandoning gasoline cars is lower than expected.

Musk stated that if the vehicle prices were more affordable, millions more people would buy Tesla. He mentioned that Tesla will introduce new, more affordable models early next year, although the company has provided little detail other than stating that these models will be produced on existing production lines. Musk also prioritizes building fully autonomous robot taxis and plans to showcase this vehicle at an event on August 8.

"For most people, it's not a question of whether they want a Tesla. They do want a Tesla. They just don't have enough money to buy one," Musk said at the June shareholders' meeting