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Tesla Shares Surge on Strong Q2 Deliveries

Tesla shares experienced a surge after the company revealed its second-quarter vehicle production and delivery figures
July 3, 2024

Tesla shares saw a significant boost on Tuesday following the announcement of second-quarter vehicle production and delivery numbers that exceeded analyst forecasts. The electric vehicle giant reported a total of 443,956 deliveries and 410,831 vehicles produced in Q2 2024, surpassing the 439,000 deliveries analysts had anticipated.

The stock jumped over 9% in midday trading, a positive shift for Tesla, whose shares had been down 16% for the year before the report. Despite a 4.8% drop from the same quarter last year, Q2 deliveries were up 14.8% from the first quarter, signaling a strong rebound.

Deliveries, which closely approximate sales, are categorized into Model 3 and Model Y vehicles and all other vehicles, without specific numbers for individual models or regions. Tesla’s current lineup includes the popular Model Y crossover, Model 3 sedan, new Cybertruck pickups, Model X SUV, and the flagship Model S sedan.

Earlier this year, Tesla reported an 8.5% drop in first-quarter deliveries, marking the first annual decline since 2020, and a 13% year-over-year revenue decline due to lower average selling prices. The dip in sales was attributed to temporary factory shutdowns following an alleged arson attack at Tesla’s Germany plant and shipping delays due to conflicts in the Red Sea.

However, Tesla's aging vehicle lineup, increased competition from other EV makers, especially in China, and CEO Elon Musk's controversial public behavior also contributed to the decline. To combat sluggish sales, Tesla has rolled out various discounts and incentives, including a zero-interest loan offer in China for Model 3 and Model Y purchases by July 31. China remains a crucial market for Tesla, generating $21.75 billion or 22.5% of its total revenue in 2023.

Despite the recent uptick in stock prices, Wells Fargo analyst Colin Langan recommended selling Tesla shares, citing concerns over declining delivery growth and reduced returns from price cuts. The firm anticipates further drops in automotive gross margins, excluding environmental credits, as price reductions and lower volumes continue through the year.

As investors await Tesla's second-quarter earnings report later this month, attention will also turn to the company’s upcoming marketing event in August, where Tesla plans to unveil the design for its new robotaxi, the "CyberCab." 

This recent surge in Tesla shares highlights the company's resilience and ability to bounce back, even amidst a challenging market and operational hurdles. As the industry leader gears up for future innovations, stakeholders will be keenly observing its strategic moves and market performance.

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