Tesla beats pandemic slump with big Q2 deliveries, shares surge again

Tesla has stunned analysts and the automotive industry with outstanding second quarter sales results, delivering more vehicles than in the first quarter despite factory shutdowns due to the Coranavirus pandemic, leading CEO and co-founder Elon Musk to taunt the SEC with a rather cheeky tweet.

The Californian EV maker delivered 90,650 vehicles from April to June, 2,000 more than the first quarter of 2020 and 10-20% more than expected on average by analysts.

While deliveries were down by 4.8% compared to the same quarter in 2019, this hasn’t dampened investors: shares soared again reaching a high of $US1,228 ($A1,859.89) on Thursday to close 8% higher than Wednesday at $US1,208.66 ($1,742.43).

That took its market value to $US224 billion ($325 billion) reinforcing its position as the most value car company in the world, eclipsing Toyota and more than trebling the combined value of legacy carmakers including GM and Ford.

The results are compelling considering the Covid-19 factory shutdowns that have affected the automotive industry, that saw Tesla furlough many workers as its Fremont factory shutdown, and which have left many legacy car makers expecting losses for the first half of 2020.

Tesla says it is now back to pre-pandemic production levels, particularly at its Fremont factory where it makes the Model 3 and Model Y, although the pandemic has still resulted in a further delay of Tesla’s upcoming Battery Day and AGM until September.

“While our main factory in Fremont was shut down for much of the quarter, we have successfully ramped production back to prior levels,” said Tesla in a statement.

CEO and co-founder Elon Musk celebrated the result by very cheekily taunting the Securities and Exchange Commission with the following tweet:

Numerous followers weighed in with jokes about what they thought this “might” stand for. “Support Elon’s cause”, “Supreme Elon’s Corporations”, “Soothe Elon’s Child” were just a few. Musk earlier tweeted, “Who wears short shorts?” also taunting Tesla stock short sellers.

More than 75,000 of vehicles produced in the second quarter were Model 3 and Model Ys, while inventory remaining at the end of the first quarter as the US ground to halt due to the pandemic meant Tesla delivered a little more than 80,000 Model 3 and Model Ys, each delivery counting as a sale.

Wedbush analyst Dan Ives said the result was a “major home run,” in a note on Thursday, raising his price target to $US1,250 and the bull case to $US2,000 according to Barron’s.

For the first and second quarter combined, this amounts to 184,944 vehicles produced and 179,050 vehicles delivered in the first half of 2020.

That equates to 20,000 more vehicle produced by Tesla than in the first half of 2019. Tesla’s Shanghai Gigafactory is now well into Model 3 production, with an estimated 2,700 vehicles a week on average for the quarter built based, with 4,000 a week estimated in June.

With the Model Y factory shell now completed as reported by Cleantechnica, Tesla will have another foot forward towards its projected 500,000 vehicles 2020 production.

Given Tesla sales up until end May, via EV Sales and as reported by The Driven on Wednesday, stood at 127,804, this would mean that in June alone, Tesla delivered around 52,000 vehicles.

The figures bode well for Tesla, given CEO and co-founder Elon Musk’s email to staff as the quarter came to an end that a break-even result would be tight, but was ultimately possible.

As noted by Business Insider, if Tesla reports a profit for the second quarter of 2020 it will tick the final box needed to qualify it for inclusion in Standard & Poor’s prestigious S&P500 index.

To qualify, Tesla must show a cumulative profit over four quarters. For the past three quarters, Tesla has reported a $US143 million $US105 million , and $US16 million profit respectively. If its Q2 2019 loss had been less than $US264 million it would have already been eligible, however in that quarter it came in at $US408 million.

Second quarter profit results will likely be held towards the end of July. If Tesla does not achieve a profit, it may have to wait until the third quarter of 2020 to be considered for inclusion.