Tesla Vehicle Deliveries Drop Annually Yet Beat Estimates In Important Quarter

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Electric vehicle and renewable energy products manufacturer Tesla Inc (NASDAQ:TSLA) has released its vehicle delivery report for the second quarter of the calendar year 2020 today. The quarter was very crucial for Tesla as it struggles to cope with a global depression in purchasing powers ushered in by the current pandemic. The company, which is widely expected by investors and analysts to reduce its current delivery forecast of 500,000 vehicles for 2020 at its earnings release for the last quarter has reported a 2.5% sequential rise and a 4.7% year-over-year drop in its vehicle deliveries for the second quarter of 2020.

Tesla's Sequential and Year-over-Year Vehicle Deliveries Rise and Drop Respectively During Second Quarter of 2020

As per the details, in the three months that ended in June, Tesla delivered 90,650 vehicles as it cleared some of its inventory left over from the previous quarter as well. Production output during the quarter stood at 82,272 vehicles, highlighting a 20% drop during the three months in which company C.E.O. Mr. Elon Musk fought tooth and nail to keep his company's production in the Fremont, California Gigafactory open during a time of crisis.

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Of the 82,272 vehicles that Tesla manufactured during the second quarter, the Models 3 and Y took the lion's share as expected, with the company having churned out roughly 76,000 units of the vehicles. The remainder belonged to its aging Model S and X, with deliveries of the vehicles outstripping production as well and reflecting the general trend witnessed during the report made public earlier today.

More important for Tesla and its investors, Q2's results show that the proportion of the company's deliveries belonging to the Models S and X has started to drop. During the first calendar quarter of 2020, roughly 14% of all Teslas delivered were the two vehicles, and this percentage has dropped to 11.6% during the second quarter.

Deliveries 2Q20201Q2020% Change % of whole (2Q2020)
Models S and X:10,60012,200(13%)11.7%
Models 3 and Y:80,05076,2005.1%88.3%

Additionally, Tesla ran into excess inventory during the first quarter of 2020 as its production outstripped deliveries and this has reversed during the second quarter despite the aforementioned purchasing power drop. For the two quarters combined, the company has delivered 179,050 vehicles, which is roughly 36% of its self-set target of delivering half a million vehicles by December this year. Taking stock of the percentages, it's clear why industry watchers expect Tesla to revise this delivery estimate downwards at its upcoming earning release.

Commenting on its production environment during the quarter, the automaker reveals that despite the Fremont plant being shut down for "much of the quarter" it has managed to successfully scale back production up to prior levels. This scaling should help Tesla for the rest of the year even if consumers in North America take longer to recover from the pandemic induced shock than their counterparts in China have.

The East Asian country is widely believed to be Tesla's 'savior' of sorts during the current crisis due to the facts that its electric vehicle market is one of the largest in the world and that it has managed to recover relatively quickly from the after-effects of the pandemic as opposed to the Western world; where fears of a 'second wave' of the virus outbreak have threatened stock markets' weary recovery.

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Tesla's only manufacturing facility in China is the Gigafactory 3 in Shanghai, which at its optimum level of production is widely believed to be unable to meet the country's booming vehicle demand successfully. By delivering 90,650 vehicles during the quarter, the automaker has nevertheless beaten consensus delivery estimates that pegged its deliveries at 83,000. Investment bank Credit Suisse, on the other hand, was more optimistic as it pegged Tesla's deliveries to stand in at a range in between 90,000 - 100,000 units.

Prior to today's report, the company's share price has reached new records on the open market as insiders undoubtedly factored in the impact of Tesla's Q2 2020 performance. Following the meteoric rise on the stock market, word of Tesla finally making it to the Standard and Poor 500 index has also started to make rounds on the street. Whether the company does make the index will depend on its upcoming earnings release.