June was Tesla’s best production month yet, despite low Q2 deliveries

Tesla’s overall deliveries in Q2 were plagued by the COVID-19 lockdowns which caused a 22-day production pause at its Shanghai Gigafactory. In spite of this fact, Tesla’s establishment of new Gigafactories Berlin and Texas are already showing their upsides, beginning with impressive production in the last month of the quarter.

Although Tesla only delivered 254,695 vehicles in the second quarter, a marked drop from its first-quarter deliveries, the automaker had its best production month yet in June, according to a report from Barron’s. While some April investor consensus forecasts held that Tesla would deliver between 340,000 and 350,000 units, the drop-off can largely be attributed to the production shutdown in Shanghai — and may only be a bump in the road.

In the first quarter, Tesla delivered a total of 310,048 vehicles, and the Q2 drop breaks an eight-consecutive-quarter streak of record-breaking deliveries. Still, some investors see Tesla’s deliveries as having made the best of a bad situation, despite representing an 18 percent drop from the prior quarter.

In one report, Wedbush analyst Daniel Ives called 250,000 a “line in the sand” for investors, saying that anything below this number would be considered a disappointment by shareholders. Ives also added that the upward arc of the second half of the quarter will be what many investors are focused on, with June’s production numbers being an encouraging sign.

“In a nutshell, while [Q2] delivery numbers were ugly and nothing to write home about the Street will be focused on the trajectory for [the second half],” Ives wrote in a note.

Above: Tesla production ramps up in June as EV makers battle chip shortages / YouTube

In the past, strong deliveries have been an early indicator of positive things for Tesla’s stock. Following seven out of the last 10 quarters where Tesla delivered more than analysts’ estimates, the automaker’s shares have outperformed the market during the period from delivery reporting and quarterly results. In Q1, Tesla’s deliveries met expectations, but the company’s shares still saw a 10-percent drop from when Tesla reported its earnings and its deliveries.

Wall Street currently estimates Tesla will have earned roughly $1.85 per share, dropping from the first quarter’s $3.22 earned for each share. The auto industry has also been hit harder than the overall market, with Tesla’s shares down by about 35 percent so far this year (38 percent in the second quarter alone), while the S&P 500 and Dow Jones Industrial Average are down 20 and 14 percent, respectively.

Tesla’s Q2 earnings report is scheduled for July 20, and will also play a major role in investor outlook beginning Q3.


Source: Barron’s