Tesla revealed on Thursday it had ridden out the coronavirus shutdown far better than expected, triggering a renewed surge in shares a day after it overtook Toyota to become the world’s most valuable carmaker.
The electric car maker said it had delivered 90,650 vehicles in the second quarter, well ahead of ahead of analysts’ expectations for 74,130, according to a Refinitiv survey. This was despite closing its Fremont, California, plant from late March to early May.
The news that Tesla’s operations had withstood the worst of the shutdown marked a personal victory for Elon Musk, chief executive, who battled local authorities in the San Francisco Bay Area to keep his company’s main plant open for as long as possible.
Although the latest quarterly deliveries were still down nearly 5 per cent from the same quarter a year ago, Tesla’s shares continued to rise on Thursday following its overtaking of Toyota by market value 24 hours earlier.
They were up 8 per cent to $1,207 on Thursday, a more than fivefold increase from $230 about 12 months ago. The company’s shares are up 167 per cent year-to-date.
The latest jump pushed its market value up to $224bn, or nearly $20bn more than Toyota, even though Tesla delivered only 3 per cent as many cars last year and has yet to turn an annual profit.
Tesla’s performance in the quarter was cushioned by output from its new car plant in Shanghai, where operations were largely unaffected by the response to the pandemic. A rapid ramp-up in production at the plant, which opened in early January, has been one of the main factors behind the near three-fold rise in the company’s stock price this year.
The Tesla delivery figures were a “jaw dropper” in a performance that could be “characterised as a ‘major home run’ speaking to its Teflon-like business model”, said Daniel Ives, analyst at Wedbush. “Bulls will run with this as a potential paradigm changer moving ahead.”
While the company did not break out regional figures, Mr Ives said China “was a major source of strength in Q2 based on our analysis and industry data”.
Wall Street has been betting that Tesla’s lead in electric cars will be extended by the coronavirus crisis, as big carmakers that had been hoping to make inroads in the new market struggle to deal with the effects of the crisis on their existing operations.
Most analysts had assumed that Tesla would sink to a loss in the second quarter, but were still hoping that it would rebound later in the year to record its first annual profit.
The better than expected deliveries came even as Tesla’s Fremont plant stopped production on March 23 because of the coronavirus crisis. The company then sued Alameda County, where the electric car maker employs more than 10,000 people, and threatened to relocate operations.
It eventually restarted production in defiance of authorities, before ultimately getting a green light to resume limited production in May.
Earlier this week it was reported that Tesla could break even despite the pandemic. “Breaking even is looking super tight,” Mr Musk wrote in an email to employees obtained by Bloomberg. “Really makes a difference for every car you build and deliver. Please go all out to ensure victory!”
The bulk of the production and deliveries were in the lower-priced Model 3 and Model Y sport utility vehicles. The company produced 75,946 of them and delivered 80,050.
